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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 much is deadweight loss?
A) $0
B) $320
C) $160
D) $500

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 much is deadweight loss?
A) $0 
B) $320 
C) $160 
D) $500

Quizplus · Accepted Answer

In a perfectly competitive industry, price equals marginal cost, so there is no deadweight loss.

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