Catalina Cable Company (CCC)faces a Demand for Basic Cable Service

question 2

Multiple Choice

Catalina Cable Company (CCC) faces a demand for basic cable service given by P = 160 - Q.It has total costs (exclusive of the required rate of return on its invested capital) of TC = 250 + Q².If the commission that regulates CCC determines that $500 is sufficient to compensate equity holders for their invested capital,what are the regulated price and output?

• A) P = 85, Q = 75.
• B) P = 75, Q = 85.
• C) P = 65, Q = 95.
• D) P = 55, Q = 105.
• E) P = 45, Q = 115.

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Definitions:

Nominal Variable

A type of variable that represents categories with no intrinsic ordering or rank among them.

Indicator Variables

Binary variables used in regression analysis, taking the value of either 0 or 1 to denote the absence or presence of a categorical effect.

Analysis of Variance

A statistical method used to compare the means of three or more samples to determine if at least one of them is significantly different from the others.

Dummy Variable

A binary variable used in regression analyses to represent categories of a nominal variable.