Question

The cable company has a natural monopoly on cable services to households in the county. They...

The cable company has a natural monopoly on cable services to households in the county. They can provide the service at ATC = 480/Q + 5, MC = $5. Demand is given by P = 77 – 1.5Q. What are the following prices for the cable company?

Socially Optimal Price

Fair-Return Price

Monopoly Price

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

3.

Under monopoly, MR = MC

TR = p*Q = 77Q - 1.5Q^2

MR = dTR / dQ = 77 - 3Q

So, 77 - 3Q = 5

Qm = 25

Pm = 77 - (3*25)

Pm = $2

So,

Socially Optimal Price = 5

Fair-Return Price = 17

Monopoly Price = 2

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Aqua Pure has a natural monopoly on providing water to households in a local apartment complex....
Aqua Pure has a natural monopoly on providing water to households in a local apartment complex. They can provide water at an average cost of ATC = 240/Q + 6, and a constant marginal cost of MC = $6. Demand for water in the apartment complex is given by P = 40 – 0.5Q. What is Aqua Pure’s unregulated monopoly price, the socially optimal price, and the fair-return price? Monopoly Price: $ _______ Socially Optimal Price: $ _______ Fair-Return Price:...
Aqua Pure has a natural monopoly on providing water to households in a local apartment complex....
Aqua Pure has a natural monopoly on providing water to households in a local apartment complex. They can provide water at an average cost of ATC = 240/Q + 6, and a constant marginal cost of MC = $6. Demand for water in the apartment complex is given by P = 40 – 0.5Q. What is Aqua Pure’s unregulated monopoly price, the socially optimal price, and the fair-return price? Monopoly Price: $ Socially Optimal Price: $ Fair-Return Price: $
Conservice has a natural monopoly on providing electricity in a neighborhood in San Luis Obispo. The...
Conservice has a natural monopoly on providing electricity in a neighborhood in San Luis Obispo. The average cost of providing electricity for Conservice is ATC = 150/Q + 2 and the marginal cost of providing electricity for them is MC = 2. Demand for electricity in this neighborhood is given by P = 58 - 2Q. What price will Conservice charge if they are forced to charge the ''fair-return price" (average-cost pricing)? (Write answer without the dollar sign.) What price...
Conservice has a natural monopoly on providing electricity in a neighborhood in San Luis Obispo. The...
Conservice has a natural monopoly on providing electricity in a neighborhood in San Luis Obispo. The average cost of providing electricity for Conservice is ATC = 150/Q + 2 and the marginal cost of providing electricity for them is MC = 2. Demand for electricity in this neighborhood is given by P = 58 - 2Q. What price will Conservice charge if they are left unregulated? (Write answer without the dollar sign.)
Karl's Cab Company has a monopoly in Junction City. The demand for taxi services in Junction...
Karl's Cab Company has a monopoly in Junction City. The demand for taxi services in Junction City is given by Q = 5 – (1/6)P. KCC's costs are given by TC = 14 + 3Q +3Q2. Its profit maximizing output is .5 1.0 1.5 2.0 Karl's Cab Company has a monopoly in Junction City. The demand for taxi services in Junction City is given by Q = 5 – (1/6)P. KCC's costs are given by TC = 14 + 3Q...
1.) A good example of a natural monopoly is a. Cable service to your house b....
1.) A good example of a natural monopoly is a. Cable service to your house b. Ocean front property c. Lumber production d. Kitchen appliances 2.) Explain in words why you will find prices that don't change for candy bars and why the price is the same for Nestle and Hershey candy bars.
Question-3 [10 marks] A local electricity company has a demand curve of P = 120 –...
Question-3 [10 marks] A local electricity company has a demand curve of P = 120 – 4Q. Average Cost = 400/Q + 4, with MC of $4 per unit. a. Is this firm a natural monopoly? [1] b. What is the socially optimal level of production and price? [2] c. Redo part b if it is a monopoly. [2] d. How much subsidy should the government give to this firm if it regulates it to charge marginal cost? [3] e....
Consider Amazon AWS as the only known company providing cloud computing service in the world. The...
Consider Amazon AWS as the only known company providing cloud computing service in the world. The demand for cloud computing service is given by P = 100 − Q, and the marginal revenue in this monopoly market is MR = 100 − 2Q. The marginal cost of providing this service is MC = 5Q. There are no fixed costs and ATC=3Q. Show your work on all parts. a. Find the monopoly output and price set by Amazon AWS. b. Calculate...
As the manager of a monopoly, you face potential government regulation. Your inverse demand is P=...
As the manager of a monopoly, you face potential government regulation. Your inverse demand is P= 25-1Q, and your costs are C(Q)= 5 Q. a. Determine the monopoly price and output b. Determine the socially efficient price and output c. What is the maximum amount your firm should be willing to spend on lobbying efforts to prevent the price from being regulated at the socially optimal level?
2. The market for a good has an inverse demand curve of p = 40 –...
2. The market for a good has an inverse demand curve of p = 40 – Q and the costs of producing the good are defined by the following total cost function: TC = 100 + 1.5Q2. a. If this good is produced in a monopoly market, provide a graph of the demand curve, marginal revenue curve and marginal cost curve. Then calculate the equilibrium output and price . b. Calculate the price elasticity of demand at the equilibrium price...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT