Use the Following to Answer Question

question 186

Multiple Choice

Use the following to answer question:
Figure: PPV
-(Figure: PPV) Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much consumer surplus is there when the monopolist maximizes profit?

• A)$20
• B)$40
• C)$80
• D)$160

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Definitions:

Unit Cost

The cost incurred to produce, acquire, or sell one unit of a product or service, calculated by dividing total costs by the number of units.

Product Volume

The quantity of units of a particular product sold or produced.

Pure Competition

A market structure characterized by a large number of small firms selling identical products, with no single entity able to influence the market price.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.