Use the Following to Answer Questions

question 102

Multiple Choice

Use the following to answer questions:
Figure: PPV
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much is producer surplus when the monopolist maximizes profit?

• A) $0
• B) $20
• C) $80
• D) $160

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Definitions:

Machine-Hours

The total duration that machinery is utilized for production activities, expressed in hours, serving as a basis for allocating machine-related costs to products.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as maintenance and repairs on equipment, utilities, and salaries for employees not directly involved in production.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs in cost-volume-profit analysis remain valid.

Average Costs

The total costs (fixed and variable) divided by the number of units produced, reflecting the average cost per unit.