March 29, 2015

Homework Help: Microeconomics

Posted by G on Monday, October 13, 2008 at 11:18am.

Is it correct that if the marginal cost in the following question is zero, then the total revenue and profit would be same?

If I am correct I picked B $60 for the answer to the question.

The table depicts the total demand for premium channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operation pays a fixed cost of $100,000 per year to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero.

Quantity--- Price

0--- ---------$120

If there were only one digital cable TV company in this market, what price would it charge for a premium digital subscription to maximize its profits?

A. $40
B. $60
C. $80
D. $100

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