Table 10-3
$\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \begin{array}{l}
\text { Total } \
\text { Revenue }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Revenue }
\end{array} & \text { Total Cost } & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline \$ 17 & 3 & \$ 51 & \cdots & \$ 56 & \cdots \
\hline 16 & 4 & 64 & \$ 13 & 63 & \$ 7 \
\hline 15 & 5 & 75 & 11 & 71 & 8 \
\hline 14 & 6 & 84 & 9 & 80 & 9 \
\hline 13 & 7 & 91 & 7 & 90 & 10 \
\hline 12 & 8 & 96 & 5 & 101 & 11 \
\hline
\end{array}$ Assume Table 10-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia.
-Refer to Table 10-3.If Comcast maximizes its profits how much profit will it earn?
A) $84
B) $40
C) $4
D) Comcast will break even.

Question

Table 10-3
 $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \begin{array}{l}
\text { Total } \
\text { Revenue }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Revenue }
\end{array} & \text { Total Cost } & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline \$ 17 & 3 & \$ 51 & \cdots & \$ 56 & \cdots \
\hline 16 & 4 & 64 & \$ 13 & 63 & \$ 7 \
\hline 15 & 5 & 75 & 11 & 71 & 8 \
\hline 14 & 6 & 84 & 9 & 80 & 9 \
\hline 13 & 7 & 91 & 7 & 90 & 10 \
\hline 12 & 8 & 96 & 5 & 101 & 11 \
\hline
\end{array}$ Assume Table 10-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia.
-Refer to Table 10-3.If Comcast maximizes its profits how much profit will it earn?
A) $84
B) $40
C) $4
D) Comcast will break even.

Quizplus · Accepted Answer

To maximize profits, Comcast should produce where marginal revenue equals marginal cost. From the table, we can see that the marginal revenue equals $7 up until the 4th subscription, then it decreases by $2 for each additional subscription. The marginal cost, on the other hand, is constant at $9 for all subscriptions. Thus, the profit-maximizing quantity is 4 subscriptions, where total revenue is $64, total cost is $36, and profit is $28. Therefore, the answer is C, $4 in monthly profits ($28 in total profits).

Table 10-3 Assume Table 10-3 Gives the Monthly Demand and Costs for Quantity