When a town has a single cable provider:
A) the cable company usually offers many different cable packages to satisfy customers' wants.
B) customers must buy some cable channels that they don't want in order to get the channels that they do want.
C) the government regulates the cable provider's offerings.
D) the cable provider is a price-taker.
E) the consumers experience no consumer surplus.

Question

Quizplus · Accepted Answer

When a town has a single cable provider, customers must typically buy bundles that include channels they don't want in order to access the channels they do want. This is because the cable provider has monopolistic control over cable programming in that area, and thus consumers have limited choices. As a result, they may pay more for cable and have less flexibility in choosing the channels they want. This can lead to less consumer surplus for cable customers. While the government may regulate the cable provider's rates or offerings in some cases, this is not a universal feature of single-provider cable towns. In addition, the cable provider may still have some pricing power (i.e. be a price-maker rather than just a price-taker) even in a monopolistic environment. Finally, while the cable company may offer different cable packages, the way these packages are structured may not always meet the specific preferences of customers in that area.

When a Town Has a Single Cable Provider