Suppose that Media Cable is a single-price monopolist in the market for cable in Anywhere, Iowa. Media
Question:
Each of these customers are willing to purchase cable service, but only if the price is just equal to, or lower than, his or her willingness to pay. Morgan’s willingness to pay is $180; Larry’s, $100; Clyda’s, $70; Janet’s, $40; and Tom’s, $0.
Media Cable’s marginal cost per cable package is $40. The demand schedule for cable service packages is shown in the accompanying table.
Price of Cable Service Quantity of Cable Service Demanded
160 .................0
130.................1
100.................2
70...................3
40...................4
0.....................5
a. Calculate Media Cable’s total revenue and its marginal revenue
b. Explain why a monopolist, such as Media Cable, faces a downward-sloping demand curve
c. Explain why the marginal revenue from an additional sale is less than the price of the service
d. Suppose Media Cable currently charges $70 for its service. If it lowered the price to $40, how large is the price effect?
e. How large is the quantity effect?
f. What is the profit maximizing quantity and price for Media Cable?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a Price of Cable Service Qty of Cable Service demanded Total Revenue M...View the full answer
Answered By
Akshay Agarwal
I am a Post-Graduate with a specialization in Finance. I have been working in the Consulting industry for the past 8 years with a focus on the Corporate and Investment Banking domain. Additionally, I have been involved in supporting student across the globe in their academic assignments and always strive to provide high quality support in a timely manner. My notable achievements in the academic field includes serving more than 10,000 clients across geographies on various courses including Accountancy, Finance, Management among other subjects. I always strive to serve my clients in the best possible way ensuring high quality and well explained solutions, which ensures high grades for the students along-with ensuring complete understanding of the subject matter for them. Further, I also believe in making myself available to the students for any follow-ups and ensures complete support and cooperation throughout the project cycle. My passion in the academic field coupled with my educational qualification and industry experience has proved to be instrumental in my success and has helped me stand out of the rest. Looking forward to have a fruitful experience and a cordial working relationship.
179+ Reviews
294+ Question Solved
Related Book For 
Question Posted:
