A cable company is considering a new suburban market

Reference no: EM13234354

A cable company is considering a new suburban market. The expected average fixed cost per home is $700. The monthly demand for residential cable in the city has been estimated to be given by q(p) ??180 ??2p , where q is expressed in thousands of households and p is the price (or charge) per month. The operator estimates a marginal cost of $20 per month per household.

1) What is the quantity of households that would subscribe at a price of $0?
2) a. Without competition in the market, what price would this cable company charge per month?
b. What is the price elasticity of demand at this price?
c. In this case, how long would the cable company need to wait to cover fixed cost?
(Hint: you need to think about how much the operator generates profits per month.)
d. Over this period of time, how much consumer surplus would be generated?

Reference no: EM13234354

Questions Cloud

What is their relationship to modernization : Summarize the role of the ulama in contemporary Islamic society. What is their relationship to modernization?

Nation-building efforts of bismarck and cavour in germany : The decade of the 1860s saw the success of the nation-building efforts of Bismarck and Cavour in Germany and Italy, respectively. Compare and contrast both cases: assess the factors for success, the difficulties encountered, and the results.

Briefly explain how napoleon bonaparte came to power : Briefly explain how Napoleon Bonaparte came to power in France, and why he is credited with bringing the French Revolution to a close.

General-equilibrium models and partial-equilibrium models : 1. Explain the difference between general-equilibrium models and partial-equilibrium models. How are the numbers of endogenous and exogenous variables related to whether a model is a partial-equilibrium or general-equilibrium model?

A cable company is considering a new suburban market : A cable company is considering a new suburban market

Fully insured person visit the physician : How many times would this fully insured person visit the physician?

Define the nationalist movement : Using Germany as an example, define the nationalist movement that was taking place in Europe during Napoleon's time in power and explain why this movement developed.

Describe different visions of greek society : Describe different visions of Greek society and an individual's role within it. How do they compare? How are some of the roles different? Is gender a factor in the role a person plays?

Natural philosophers and enlightenment thinkers : In general, the natural philosophers and Enlightenment thinkers of the 16th, 17th, and 18th centuries complemented rather than challenged the religious and political status quo with regard to the operations of the universe and the relationship betwee..

User Account

All Pages