Consider the local cable company, a natural monopoly. 111e following graph shows the monthlz.r demand curve for cable services and the company's marginal revenue [MR], marginal cost (MC), and average total cost (ATE) curves. 6) PRICE (Dollars per subscription) n 2 4 a a 10 12 14 15 13 20 QUANTITY {Thousands of subscriptions] Suppose that the government has decided not to regulate this industry; and the rm is free to maximize prots, without constraints. Complete the rst row of the following table. Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal-Cost Pricing 8,000 Average-Cost Pricing 15,000 Suppose that the government f 16,000 monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Over time, the cable company has a very strong incentive to lower costs when subject to average-cost pricing regulations. O True FalseSuppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal-Cost Pricing 20 Average-Cost Pricing 25 Suppose that the government forces the monopolist to set th 29 equal to marginal cost. 60 Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Over time, the cable company has a very strong incentive to lower costs when subject to average-cost pricing regulations. O True O FalseSuppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal-Cost Pricing Negative Average-Cost Pricing Positive Suppose that the government forces the monopolist to set the price equal to marg Zero Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Over time, the cable company has a very strong incentive to lower costs when subject to average-cost pricing regulations. O True O FalseSuppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal-Cost Pricing Exit the industry Average-Cost Pricing Stay in business Suppose that the government forces the monopolist to set the price equal to marginal cost. Stay or exit Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Over time, the cable company has a very strong incentive to lower costs when subject to average-cost pricing regulations. True