Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable company's marginal cost of providing cable service along with the community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes profits, consumer surplus equals $ 200 (enter a numeric response using a real number rounded to one decimal place), and producer surplus equals $ 600 Compared to the perfectly competitive market outcome, the cable company creates dead weight loss equal to $ 120- 110 100- 90- MC a G 80- 70- 60- 50- Price and cost (dollars per cable subscription) 40- 30- 20- 10- Of 0 MR 10 20 30 40 50 60 70 80 Quantity of cable subscriptions 90 100

Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable company's marginal cost of providing cable service along with the community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes profits, consumer surplus equals $ 200 (enter a numeric response using a real number rounded to one decimal place), and producer surplus equals $ 600 Compared to the perfectly competitive market outcome, the cable company creates dead weight loss equal to $ 120- 110 100- 90- MC a G 80- 70- 60- 50- Price and cost (dollars per cable subscription) 40- 30- 20- 10- Of 0 MR 10 20 30 40 50 60 70 80 Quantity of cable subscriptions 90 100

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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