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Scenario: A Small-Town Monopolist
A monopolist sells cable subscriptions in a small town and finds that it can sell 100 subscriptions when the price is $15 a week and an additional 75 subscriptions when the price is $10 a week. The MC for the provision of the cable is $5 a week. There are no fixed costs.
-(Scenario: A Small-Town Monopolist) Look at the scenario A Small-Town Monopolist. If this monopolist chooses to sell subscriptions at one price, it will sell _____ units at a price of _____ and earn economic profits equal to _____.
A) 75; $10; $500
B) 100; $15; $1,000
C) 175; $15; $1,000
D) 100; $10; $750

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The monopolist maximizes profit by setting a price where marginal cost equals marginal revenue. Selling 100 subscriptions at $15 each yields a total revenue of $1,500. With a marginal cost of $5 per subscription, the total cost is $500, resulting in an economic profit of $1,000.

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