Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. (? 100 90 80 70 60 50 40 30 ATC 20 MC 10 MR I 2 6 8 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization PRICE (Dollars per subsaription)
Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. (? 100 90 80 70 60 50 40 30 ATC 20 MC 10 MR I 2 6 8 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization PRICE (Dollars per subsaription)
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 7P
Related questions
Question
100%
the choices for the three "quantity" column are (6000, 10400, 12000).
the choices for the "price: column are (20,28,34,50)
the choices for profit are (negative,prositve, zero)
the choices for long run decision are (exit the industry, stay in business, stay or exit)
please also do the rest of the questions. thankyouuuu
Transcribed Image Text:Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's
marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.
(?
100
90
80
70
60
50
40
30
ATC
20
MC
10
MR I
D
2
6
10
12
14
16
18
20
QUANTITY (Thousands of subscriptions)
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints.
Complete the first row of the following table.
Short Run
Quantity
Price
Pricing Mechanism
(Subscriptions)
(Dollars per subscription)
Profit
Long-Run Decision
Profit Maximization
PRICE (Dollars per subsaription)
Transcribed Image Text:30
ATC
20
MC
10
MR
D
2
4
6
8
10 12 14
16
18
20
QUANTITY (Thousands of subscriptions)
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints.
Complete the first row of the following table.
Short Run
Quantity
Price
Pricing Mechanism
(Subscriptions) (Dollars per subscription)
Profit
Long-Run Decision
Profit Maximization
Marginal Cost Pricing
Average Cost Pricing
Suppose that the government forces the monopolist to set the price equal to marginal cost.
Complete the second row of the previous table.
Suppose that the government forces the monopolist to set the price equal to average total cost.
Complete the third row of the previous table.
True or False: Over time, the cable company has a very strong incentive to lower costs when subject to average cost pricing regulations.
True
False
PRICE (
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