-The Above Figure Shows the Demand for Cable and the Cable

question 596

Essay

-The above figure shows the demand for cable and the cable company's cost of providing cable.
a) What price and quantity will be produced if the company is unregulated and profit maximizes?
b) What price and quantity will be produced if the company is regulated using the marginal cost pricing rule?
c) What is the advantage of the marginal cost pricing rule?
d) What price and quantity will be produced if the company is regulated using the average cost pricing rule?
e) What is the advantage of the average cost pricing rule?

---

Definitions:

Ambrosia

In classical mythology, the food of the gods, which conferred immortality; in general usage, something very pleasing to taste or smell.

Plowshares

Metal blades fitted to a plow, used in farming to cut through the soil.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than other entities, leading to more efficient economic exchanges.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and production technology.