Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).According to the Application, the reason why the consumer surplus still increases as cable prices rise after satellite TV service is introduced in an area with cable TV service, is:

A. the quality of services improves and is larger than the increase in the price of cable services.
B. the quality of services improves and is smaller than the increase in the price of cable services.
C. the tax revenues that the government receives is larger than the price increase.
D. the tax revenues that the government receives is smaller than the price increase.


Answer: A

Economics

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