Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small) Price 68 64 60 56 Quantity 3 52 48 4 5 172 28 204 32 240 36 364 280 40 384 324 44 Suppose the local government imposes a $99 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60) 6 Total Revenue. 7 8 204 256 300 336 Marginal Revenue 52 44 36 28 20 OA. Comcast should produce 6 units in the short run and shut OB. Comcast should shut down in the short run and in the long run OC. Comcast should shut down in the short run and produce 6 units in the long run OD. Comcast should produce 6 units in the short run and in the long run OE. None of the above Total Cost 144 down in the long run Marginal Cost Suppose that the flat per-month tax is replaced with a tax on the firm of $16 per cable subscriber (Assume that Comcast will sell only the quantities listed in the table) To maximize profit, Comcast will sell subscriptions (enter a numenc response using an integer) and charge a price of $ for profits of s

Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small) Price 68 64 60 56 Quantity 3 52 48 4 5 172 28 204 32 240 36 364 280 40 384 324 44 Suppose the local government imposes a $99 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60) 6 Total Revenue. 7 8 204 256 300 336 Marginal Revenue 52 44 36 28 20 OA. Comcast should produce 6 units in the short run and shut OB. Comcast should shut down in the short run and in the long run OC. Comcast should shut down in the short run and produce 6 units in the long run OD. Comcast should produce 6 units in the short run and in the long run OE. None of the above Total Cost 144 down in the long run Marginal Cost Suppose that the flat per-month tax is replaced with a tax on the firm of $16 per cable subscriber (Assume that Comcast will sell only the quantities listed in the table) To maximize profit, Comcast will sell subscriptions (enter a numenc response using an integer) and charge a price of $ for profits of s

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.8P

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Similar questions

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What is a natural monopoly?
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Suppose that the government instituted a per-unit tax on the output of a monopoly firm. A. graph this situation? B. On the same graph show what would happen to the market equilibrium after implementation of such a tax? C. On the same graph how would you show which economic actor pays most of the tax? You are to not only draw the graph but also explain the answer
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Q2: Suppose that the foreign country (say, France) has a monopoly in the airplane industry and the home country (say, China) is considering imposing a tariff on airplane imports from France. Use a demand-, supply-, and marginal-revenue-curve graph to show: The effect of this tariff on the foreign monopolist’s profit; The effect of this tariff on the home country’s consumer surplus, government revenue, and total welfare. Is the home country unambiguously worse off as a result of the tariff? When would the country become better off?
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The graph above shows the cost and revenue curves for a natural monopoly that provides electrical power to the town of Fanaland. If unregulated, the monopolist operates to maximize its profit. (a) Identify the monopolist’s profit-maximizing quantity and price. (b) Assume the town government of Fanaland regulates the monopolist’s price to achieve the allocatively efficient quantity. What price would the government set in order to achieve the allocatively efficient quantity? (c) Will producing the allocatively efficient quantity be economically feasible for the monopolist? Explain. (d) Suppose instead the town government wants to regulate the monopolist to earn zero economic profit. What price would the government set to have the monopolist earn zero economic profit? (e) Based on your answer to part (d), will the deadweight loss increase, decrease, or stay the same as that of the unregulated monopolist? Explain.