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:

Dorsal Root Ganglion

A cluster of sensory neurons located in the dorsal root of a spinal nerve, transmitting sensory information to the spinal cord.

Ventral Root

A bundle of motor neuron fibers emerging from the anterior aspect of the spinal cord and conveying impulses from the central nervous system to the muscles.

Spinal Nerve

One of the 31 pairs of nerves that originate from the spinal cord, providing motor and sensory functions to the body.

Dorsal Root

The sensory branch of a spinal nerve that enters the spinal cord, carrying sensory information from the peripheral nervous system to the central nervous system.