# The Mobile Phone Company has served Mobile, Alabama, since the 1930s as a government-authorized natural monopoly. The following table describes a portion of the demand curve for long-distance service facing Mobile Phone Company. a. Complete the table. b. How does the company's marginal revenue change as the price changes? What is the relationship between marginal revenue and price? c. At what price does demand become inelastic? d. What will happen to the elasticity of demand when a new company. Mobile Phones of Mobile starts a competing wireless phone company?

### Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329

Chapter
Section

### Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329
Chapter 13, Problem 6P
Textbook Problem
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## The Mobile Phone Company has served Mobile, Alabama, since the 1930s as a government-authorized natural monopoly. The following table describes a portion of the demand curve for long-distance service facing Mobile Phone Company.a. Complete the table.b. How does the company's marginal revenue change as the price changes? What is the relationship between marginal revenue and price?c. At what price does demand become inelastic?d. What will happen to the elasticity of demand when a new company. Mobile Phones of Mobile starts a competing wireless phone company?

To determine

(a)

To compute:

The various values in the table.

### Explanation of Solution

The values are as shown in the table below:

 Quantity Price TR MR Elastic or Inelastic 30 3.65 109.5 0 Elastic 31 3.58 110.98 1.48 Elastic 32 3.5 112 1.02 Elastic 33 3.43 113.19 1.19 Elastic 34 3.35 113.9 0.71 Elastic 35 3.27 114.45 0.55 Elastic 36 3.2 115.2 0.75 Elastic 37 3.12 115.44 0.24 Elastic 38 3.05 115.9 0.46 Elastic 39 2.97 115.83 -0...
To determine

(b)

To explain:

The way company's MR changes as price changes and also describe the relationship between MR and price.

To determine

(c)

To compute:

The prices at which demand becomes inelastic.

To determine

(d)

To explain:

The changes in elasticity of demand when a new company enters into the market.

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