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Figure: PPV
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,then it will sell _____ subscriptions.
A)10
B)8
C)6

Question

Use the following to answer question:
Figure: PPV 
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,then it will sell _____ subscriptions.
A)10 
B)8 
C)6

Quizplus · Accepted Answer

With perfect price discrimination, the cable company will sell subscriptions up to the point where marginal cost equals marginal revenue. In the figure (not visible here, but based on the description), this point occurs where the marginal revenue curve intersects the marginal cost line set at $40. Assuming this intersection happens at 6 subscriptions, that would be the correct answer.

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