A Cable Company Can Add a Subscriber for ________ and a Market

question 48

Multiple Choice

A cable company can add a subscriber for ________ and a market failure occurs because the price charged ________.

• A)nearly zero marginal cost; exceeds marginal cost
• B)less than average cost; reduces consumer surplus
• C)nearly zero marginal cost; is extortionist
• D)average variable cost; increases producer surplus

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Definitions:

Source Documents

Original records or documents that contain the details of a business transaction, used as evidence in accounting.

Financial Leverage

The use of borrowed funds (debt) to amplify returns from investments or projects.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Company's Risk

Refers to the potential for loss or adverse effects on a company's financial health and operational performance, due to internal or external factors.