Suppose that Comcast is the only provider of cable service in the city of Baytown, Texas. The following graph shows the monthly demand for cable services in Baytown and Comcast’s marginal revenue and marginal cost curves. Use the graph to answer the following questions. 

a. Imagine that you are an analyst at Comcast. What price would you recommend the company charge? At that price, how many customers would they have each month? 

b. Does the monopoly outcome result in an efficient outcome in this market? 

c. Now, imagine that you are a policy analyst tasked with finding a way to make cable more affordable for Baytown residents. In order to achieve an efficient outcome in this market, what price would the government use as a price ceiling?

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Price ($ per dose) $44 $26 $8 Marginal revenue 9 11 18 Marginal cost 22 Quantity (millions of doses) Stevenson/Wolfers, Principles of Economics, 1e, 2020 Worth Publishers Demand