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Figure: PPV
-(Figure: PPV) Look at the figure PPV, which 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 $20. If the cable company is in a perfectly competitive industry, how many subscriptions will it sell?
A) 2
B) 4
C) 6
D) 8

Question

Use the following to answer questions:
Figure: PPV 
-(Figure: PPV) Look at the figure PPV, which 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 $20. If the cable company is in a perfectly competitive industry, how many subscriptions will it sell?
A) 2 
B) 4 
C) 6 
D) 8

Quizplus · Accepted Answer

In a perfectly competitive industry, firms produce where price equals marginal cost. If the marginal cost is $20, the cable company will sell subscriptions where the price is $20, which corresponds to 8 subscriptions on the demand curve.

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