The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $100,000 (per year) to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero.

Table 1

Quantity

Price (per year)

0

$120

3,000

$100

6,000

$ 80

9,000

$ 60

12,000

$ 40

15,000

$ 20

18,000

$ 0

9.Refer to Table 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?

a.$40

b.$60

c.$80

d.$100

10.Refer to Table 1. Assume that there are two digital cable TV companies operating in this market. If they are able to collude on the price and quantity of subscriptions to sell, what price (P) will they charge, and how many subscriptions (Q) will they sell collectively?

a.P = $40, Q = 12,000

b.P = $60, Q = 9,000

c.P = $80, Q = 6,000

d.P = $100, Q = 3,000