Question 2

Refer to Scenario below to answer the following questions.

The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Qis the number of households that would subscribe to the cable service and Pis the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household.

2.1) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how many households would it service?

Working calculation:

2.2) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per household per month?

Working calculation:

2.3) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how much profit would it earn?

Working calculation:

2.4) What is the most Fun Cable Company would bid for the franchise?

Working calculation:

2.5) At what level of output (number of households) is Fun Cable Company's total revenue maximized?

Working calculation:

Question 3

While charging a normal admission fee for adults most days of the week, local cinema offers special low price for ladies' admission every Wednesday. Why do you suppose the cinema often price this way, offering lower fee on one day during the week? Why would they choose a day like Wednesday rather than Saturday?

Question 4

Choose any one brand and identify its market structure. Explain the characteristics of this brand to conform with the structure.

Question 1

Refer to the table below to answer the questions.

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Using Units of Variable Inputs Produce Techniques K L 1 unit of output 8 12 2 units of output 12 20 3 units of output 16 12 12 22