omplete 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 ppose that the government forces the monopolist to set the price equal to marginal cost. omplete the second row of the previous table. uppose that the government forces the monopolist to set the price equal to average total cost. omplete the third row of the previous table. ue or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True O False

Question
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.
 
omplete 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
ppose that the government forces the monopolist to set the price equal to marginal cost.
omplete the second row of the previous table.
uppose that the government forces the monopolist to set the price equal to average total cost.
omplete the third row of the previous table.
ue or False: Under the average cost pricing policy, the cable company has no incentive to cut costs.
True
O False
Expand
Transcribed Image Text

omplete 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 ppose that the government forces the monopolist to set the price equal to marginal cost. omplete the second row of the previous table. uppose that the government forces the monopolist to set the price equal to average total cost. omplete the third row of the previous table. ue or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True O False

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