Consider the Following Information for a Regional Cable Television Service

question 33

Multiple Choice

Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve.(Assume the service provided is basic cable and units are household connections.) - minimum LRAC = $9.00 per month
- minimum efficient scale = 2 million units
- current output = 2.3 million units
- LRAC at current output = $10.25 per month
Suppose the firm is currently being regulated and is required to follow a marginal-cost pricing policy.The price of the service will be ________ per month.

• A)lower than $9.00
• B)$9.00
• C)between $9.00 and $10.25
• D)$10.25
• E)higher than $10.25

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Definitions:

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant stimuli over time.

Absolute Threshold

The smallest level of stimulus that can be detected by a sense at least 50% of the time.

Target Stimulus

A specific stimulus aimed at eliciting a particular response in an experimental or learning context.

Signal-detection Theory

A framework describing how stimuli are detected under different conditions, highlighting the role of decision-making amidst noise.