Refer to Scenario 13

question 133

Multiple Choice

Refer to Scenario 13.1 below to answer the question(s) that follow.
SCENARIO 13.1: The government of Catalina Island is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P = 55 - 0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR = 55 - 0.02Q. Universal Entertainment is interested in bidding for the right to provide cable service on Catalina Island. It has a constant average and marginal cost of $15 for providing cable service to each household.
-Refer to Scenario 13.1. If Universal Entertainment were to be awarded the exclusive right to provide cable service on Catalina Island, how much profit would it earn?

• A) $0
• B) $40,000
• C) $70,000
• D) $80,000

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Definitions:

Unemployment

The situation in which individuals who are capable of working and actively seeking employment are unable to find a job.

Inflation

A rise in the general level of prices of goods and services in an economy over a period of time.

Debt to GDP Ratio

A measure of a country's debt compared to its Gross Domestic Product, indicative of the country's ability to pay back its debt.

Developed Nations

Countries with advanced industrial economies, high living standards, well-established infrastructures, and stable governments.