Table 17-3. The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $200,000 (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.

-Refer to Table 17-3.If there is only one digital cable TV company in this market,what price would it charge for a premium digital channel subscription to maximize its profit?
A) $30
B) $60
C) $90
D) $150

Question

Table 17-3. The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $200,000 (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.
 
-Refer to Table 17-3.If there is only one digital cable TV company in this market,what price would it charge for a premium digital channel subscription to maximize its profit?
A) $30 
B) $60 
C) $90 
D) $150

Quizplus · Accepted Answer

A monopoly maximizes profit by setting a price where marginal revenue equals marginal cost. Without specific data from Table 17-3, the typical monopoly pricing strategy would suggest a higher price point, such as $90, to maximize profit.