-The Figure Above Shows the Demand Curve (D) Faced by Visual

question 252

Multiple Choice

-The figure above shows the demand curve (D) faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR) , marginal cost (MC) , and average cost (LRAC) curves. If Visual is regulated according to an average cost pricing rule, it will serve ________ million households and set a price of ________ per household per month.

• A) 1; $48
• B) 4; $12
• C) 2; $36
• D) 3; $24

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Definitions:

Variable Expenses

Costs or expenses that change in proportion to business activity levels or volume, such as sales commissions or raw material costs.

Traceable Fixed Expenses

Fixed costs directly associated with specific business segments, which would be eliminated if the segment was discontinued.

Net Operating Income

The amount of income generated from regular business operations after subtracting operating expenses but before taxes and interest.

Single Product

Refers to a business strategy or condition where a company focuses on producing and selling one specific product.