Consider the Following Information for a Regional Cable Television Service

question 120

Multiple Choice

Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve.(Assume the service provided is basic cable and units are household connections.) - minimum LRAC = $9.00 per month
- minimum efficient scale = 2 million units
- current output = 2.3 million units
- LRAC at current output = $10.25 per month
If this firm is currently being regulated and is following an average-cost pricing policy,the price of the service is ________ per month.

• A)less than $9.00
• B)$9.00
• C)between $9.00 and $10.25
• D)$10.25
• E)higher than $10.25

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Definitions:

Music

An art form consisting of sequences of sounds in time, typically employing melody, harmony, rhythm, and timbre.

Pain Relief

The act or an instance of reducing or eliminating discomfort or distress in the body.

Unpleasant Events

Occurrences that cause discomfort, distress, or unhappiness to an individual or group.

Stress

A physical, mental, or emotional factor that causes bodily or mental tension and may be a factor in disease causation.