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). Quantity 3 4 Total Revenue 5 6 7 8 153 192 Price 51 108 48 129 45 153 42 180 39 210 36 243 Suppose the local government imposes a $73 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $45.) 225 252 273 288 Marginal Revenue OA. Comcast should produce 6 units in the short run and shut down in the long run. O B. Comcast should shut down in the short run and produce 6 units in the long run. OC. Comcast should shut down in the short run and in the long run. O D. Comcast should produce 6 units in the short run and in the long run. OE. None of the above. Total Cost 39 33 27 21 15 Marginal Cost 21 24 27 30 33 Suppose that the flat per-month tax is replaced with a tax on the firm of $12 per cable subscriber. (Assume that Comcast will sell only the quantities listed in the table). To maximize profit, Comcast will sell subscriptions (enter a numeric response using an integer) and charge a price of $ for profits of $

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). Quantity 3 4 Total Revenue 5 6 7 8 153 192 Price 51 108 48 129 45 153 42 180 39 210 36 243 Suppose the local government imposes a $73 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $45.) 225 252 273 288 Marginal Revenue OA. Comcast should produce 6 units in the short run and shut down in the long run. O B. Comcast should shut down in the short run and produce 6 units in the long run. OC. Comcast should shut down in the short run and in the long run. O D. Comcast should produce 6 units in the short run and in the long run. OE. None of the above. Total Cost 39 33 27 21 15 Marginal Cost 21 24 27 30 33 Suppose that the flat per-month tax is replaced with a tax on the firm of $12 per cable subscriber. (Assume that Comcast will sell only the quantities listed in the table). To maximize profit, Comcast will sell subscriptions (enter a numeric response using an integer) and charge a price of $ for profits of $

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 7P

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Similar questions

Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
Is a monopolist allocatively efficient? Why or why not?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)
What is a natural monopoly?
If public utilities are a natural monopoly, what would be the danger in deregulating them?
Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?
Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?