Table: Cable TV The Table Represents the Maximum Willingness to Pay (Per Month)

question 230

Essay

Table: Cable TV $$\begin{array} { l c c c } \hline & \text { Steve } & \text { Jim } & \text { Sandy } \\\hline \text { HBO } & \$ 30 & \$ 20 & \$ 25 \\\text { ESPN } & \$ 50 & \$ 20 & \$ 15 \\\text { HGTV } & \$ 5 & \$ 5 & \$ 40 \\\hline\end{array}$$
The table represents the maximum willingness to pay (per month) across three consumers for different TV channels. The marginal cost of providing each of these channels to an additional consumer approximates zero. If the cable television company does not bundle stations, what price should they charge per station to maximize profits across these three consumers? Could the company increase profits by bundling these three stations together? How much would profits increase or decrease by if the company bundled the stations?

---

Definitions:

Metric

A standard of measurement used to quantify results, performance, or behaviors in various contexts, including business, science, and everyday activities.

Calculation

The process of determining something by mathematical or logical methods.

Ratio

A quantitative relationship between two numbers, showing how many times one value contains or is contained within the other.

Equivalent Sales Increase

A metric that assesses additional revenue by comparing the effects of various marketing or operational initiatives as if they were translated directly into sales.