Fill in the following chart:- MARKET SRUCTURE Perfect competition Monopoly No. b

Question

Fill in the following chart:- MARKET SRUCTURE Perfect competition Monopoly No. buyers & sellers Barriers to entry Type of product Nature of information PERFORMANCE: LONG-RUN Economic efficiency (P=min ATC) Allocative efficiency (P=MC) PERFORMANCE: VERY. LONG-RUN (TECH. CHANGE) R&D; INNOVATION For the performance categories, state in a phrase why your answer is yes or no. Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we once again keep the number of subscriptions artificially small): Fill in the missing value in the table. If Comcast wants to maximize profits, what price should it charge, and how many cable subscriptions per month should it sell? How much profit will Comcast make? Briefly explain.

Explanation / Answer

5.

b. if compost wants to maximize profits, it should charge $24 and 6 cable subscriptions per month it should sell. (Because at Q= 6, the equilibrium condition MR = MC is satisfied. And profit = TR - TC = $144 - $110 = $34.

P($) Q TR($) = P*Q MR($) TC($) MC($) ATC($) 27 3 81 - 56 - 18.67 26 4 104 23 73 17 18.25 25 5 125 21 91 18 18.20 24 6 144 19 110 19 18.33 23 7 161 17 130 20 18.57 22 8 176 15 151 21 18.88

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