Superior Cable TV buys the right to provide an exclusive movie network (HBOW) in its province. Superior pays $300,000 a year for HBOW and the marginal cost of providing HBOW is zero. Superior's economist realizes they have two groups of customers: the 8,000 hard-core HBOW fans who will pay up to $300 a year for the exclusive network; and the 70,000 casual TV viewers who will pay up to $30 a year for HBOW. If Superior Cable TV can price discriminate, what is its maximum profit?

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
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Superior Cable TV buys the right to provide an exclusive movie network (HBOW) in its province. Superior pays $300,000 a year for HBOW and the marginal cost of providing HBOW is zero. Superior's economist realizes they have two groups of customers: the 8,000 hard-core HBOW fans who will pay up to $300 a year for the exclusive network; and the 70,000 casual TV viewers who will pay up to $30 a year for HBOW.
If Superior Cable TV can price discriminate, what is its maximum profit?
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