Related to the Economics in Practice on page 279: Which of the following best explains why cable television consists of local monopolies?
A) A firm that is awarded a local cable monopoly must follow a set of rules governing price and availability.
B) Profit margins in the cable television industry are consistently higher than those of other industries.
C) Fixed costs are high, but the marginal cost of serving additional customers is low.
D) As the cable television industry has matured, access to cable television is increasingly perceived as a household necessity.

Question

Quizplus · Accepted Answer

High fixed costs and low marginal costs create a natural monopoly, where a single firm can serve the market more efficiently than multiple firms.

Related to the Economics in Practice on Page 279: Which