The Demand and Supply Functions for Basic Cable TV in the Local

question 92

Essay

The demand and supply functions for basic cable TV in the local market are given as:
Q_D= 200,000 - 4,000P and Q_S = 20,000 + 2,000P. Calculate the consumer and producer surplus in this market. If the government implements a price ceiling of $15 on the price of basic cable service, calculate the new levels of consumer and producer surplus. Are all consumers better off? Are producers better off?

Understand the role of fixed and variable costs in costing methods.

Calculate the value of ending inventory under both absorption and variable costing.

Understand the concept of contribution margin.

Analyze the impact of cost structure on gross margin and contribution margin.