Table 17-4

question 348

Multiple Choice

Table 17-4. The information in the table below shows the total demand for high-speed Internet subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $200,000 (per year) and that the marginal cost of providing an additional subscription is always $80.

-Refer to Table 17-4.Suppose there is only one high-speed Internet service provider in this market and it seeks to maximize its profit.The company will

• A) sell 6,000 subscriptions and charge a price of $200 for each subscription.
• B) sell 8,000 subscriptions and charge a price of $160 for each subscription.
• C) sell 10,000 subscriptions and charge a price of $120 for each subscription.
• D) sell 12,000 subscriptions and charge a price of $80 for each subscription.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single party can dictate prices or terms of trade.

Government Antitrust

Regulatory actions and laws implemented by the government to promote competition and prevent monopolies and other practices that restrain trade.

Price Setting

The process by which a company decides on the selling price of its products or services.

Identical Products

Goods that are exactly the same in every feature and aspect, making them perfect substitutes for one another.