Table 17-5 The Information in the Table Below Shows the Total Demand

question 80

Multiple Choice

Table 17-5
The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $200,000 (per year) to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero.
-Refer to Table 17-5. Assume that there are two profit-maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?

• A)$25,000
• B)$90,000
• C)$160,000
• D)$215,000

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Definitions:

Negotiator

A person skilled in conducting discussions and reaching agreements between parties with differing interests.

Win-lose Strategy

A competitive strategy where one party's gain is perceived to be at the other party's loss, emphasizing conflict over cooperation.

Irrational Behavior

Actions or decisions that lack logic or reason, often influenced by emotions, misunderstandings, or cognitive biases.

Win-win Agreement

A negotiation result where all parties involved gain benefits or a satisfactory outcome, ensuring a positive situation for everyone.