1.7 Decrease in Cable Demand. Consider a cable TV company that has a fixed cost of $48 million and a mar ginal cost of $5 per subscriber. The company is regu lated with an average-cost pricing policy.

a. The first two columns of the following table show three points on the initial demand curve. For exam ple, at a price of $15 the quantity demanded is 6 mil lion subscribers. For each $2 reduction in price, the number of subscribers increases by 1 million. Fill in the blanks in the following table. The regulated price is

.

price subscribers (Millions)

Average Cost

$15 6

13 7

11 8

b. Suppose the demand for the product decreases, with the demand curve shifting to the left by 1 million subscribers. Fill in the blanks in the following table. The new regulated price is

$

.

price subscribers (Millions)

Average Cost

$15 13 11