Question

3,000 6,000 9,000 12,000 15,000 18,000 $120 $100 $ 80 $ 60 $ 40 $ 20 $ 0 1. Refer to Table 16-1. If there is only one digital cable TV company in this market, what price would it charge for a premium digital channel subscription to maximize its profit? 19.1$40 b.$60 10.580 d. $100 2. Refer to Table 16-1. Assume that there are two digital cable TV companies operating in this market. If they are able to "collude" on price and quantity of subscriptions to sell, what price (P) will they charge, and how many subscriptions (Q) will they collectively sell? a. P = $40, Q = 12,000 b. P = $60, Q = 9,000 c. P = $80, Q = 6,000 dP=$100, Q = 3,000

Answer 1

Quantity	price	total revenue
0	$120	0
3000	$100	3,00,000
6000	$80	4,80,000
9000	$60	5,40,000
12000	$40	4,80,000
15000	$20	3,00,000
18000	$0	0

Since marginal cost of providing service is zero, the maximum profit will be achieved where total revenue is maximum.

Here total revenue is maximun at $60 (5,40,000)

Answer of first part = $60

The firm maximizes it's profit when it charge $60.
At this price TR IS MAXIMUM AND AFTER THIS PRICE ITS TR falls.

Ans-2 b) p=$60;q=9000

This is because at this point TR is maximum and after this point TR falls. So a firm will produce 9000 at $60.