Amanda inherited the only local cable TV company in town after her father passed away.The company is completely unregulated by the government and is therefore free to operate as it wishes.Assume that Amanda understands the true power of her new monopoly.Which of the following statements is (are)correct?
(i)She will be able to set the price of cable TV service at whatever level she wishes.
(ii)The customers will be forced to purchase cable TV service at whatever price she wants to set.
(iii)She will be able to achieve any profit level that she desires.

Question

Quizplus · Accepted Answer

Amanda can set the price at any level she wishes due to the lack of competition, but customers are not forced to purchase if they find the price too high, and she cannot achieve any profit level she desires as demand and cost constraints still apply.

Amanda Inherited the Only Local Cable TV Company in Town