Table 17-7 The Information in the Table Below Shows the Total Demand

question 256

Multiple Choice

Table 17-7
The information in the table below shows the total demand for internet radio subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal cost of providing an additional subscription is always $16.
-Refer to Table 17-7. Assume there are two internet radio providers that operate in this market. If they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions, then their agreement will stipulate that

• A)each firm will charge a price of $40 and each firm will sell 3,000 subscriptions.
• B)each firm will charge a price of $40 and each firm will sell 1,500 subscriptions.
• C)each firm will charge a price of $32 and each firm will sell 2,000 subscriptions.
• D)each firm will charge a price of $20 and each firm will sell 3,000 subscriptions.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for its product or service, regardless of demand differences.

Marginal Revenue

The additional income that an organization receives from selling one more unit of a good or service.

Output

The total amount of goods or services produced by a company, industry, or economy over a certain period.