Refer to Scenario 13.1 below to answer the question(s) that follow. SCENARIO 13.1: The government of Catalina Island is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P = 55 - 0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR = 55 - 0.02Q. Universal Entertainment is interested in bidding for the right to provide cable service on Catalina Island. It has a constant average and marginal cost of $15 for providing cable service to each household.Refer to Scenario 13.1. If Universal Entertainment were to be awarded the exclusive right to provide cable
service on Catalina Island, how much profit would it earn?
A. $0
B. $40,000
C. $70,000
D. $80,000
Answer: B
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If the marginal propensity to consume is 0.6, the marginal propensity to save is
A) 0.4. B) 0.6. C) 1. D) 1.5.
The argument that econometric policy evaluation is likely to be misleading if policymakers assume stable economic relationships is known as
A) the monetarist revolution. B) the Lucas critique. C) public choice theory. D) new Keynesian theory.
If the bidders at an oral auction have true values of $8, $7, $6, and $5, the item will sell for
a. $8 b. $7 c. just over $7 d. just under $7
The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad. B. stabilizing the exchange rate against external shocks. C. stabilizing the interest rate against foreign capital outflows. D. promoting long term economic growth.