Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcasts demand and cost
Question:
Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast’s demand and cost per month for subscriptions to basic cable. (For simplicity, we keep the number of subscribers artificially small.)
a. Fill in the missing values in the table.
b. If Comcast wants to maximize profit, what price should it charge, and how many cable subscriptions per month should it sell? How much profit will Comcast make? Briefly explain.
c. Suppose the city government imposes a $25- per-month tax on Comcast. Now what price should Comcast charge, how many subscriptions should it sell, and what will its profit be?
Transcribed Image Text:
Price $27 22222 26 25 24 23 Quantity 3 456 78 Total Revenue Marginal Revenue ATR MR = AQ Total Cost $56 73 91 110 130 151 Marginal Cost ATC MC = AQ
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a b c Step 1 Review the chapter material This problem is about finding the profit maximizing quantit...View the full answer
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