Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees andmaintenance expenses. These fixed costs total $320,000 monthly. The marginal cost of adding another subscriber to its system is constant at $6 permonth. Gouge-em's demand curve can be determined from the data in the accompanying table.Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices.Total Revenue($, Thousands)$Fixed Cost($, Thousands)$320$$$$$Number of SubscribersSubscription Price (Thousands Per Month)$2520!1510O O O51Gouge-em will charge$5$1020$15406080$20100150for its cable services, earning them a profit of $$320$320$320$320$320Now suppose the Backwater County Public Utility Commission has the data and believes that cable subscription rates in the county are too expensiveand that Gouge-em's profits are unfairly high.Total Cost($, Thousands)$$$$$$What regulated price will the Backwater County Public Utility Commission set so that Gouge-em makes only a normal rate of return on its investment?thousand.Profit($, Thousands)$$$$$ Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices.Number of Subscribers(Thousands Per Month)20Total Revenue($, Thousands)Fixed Cost($, Thousands)$32040$3206080100Subscription Price$2520151051Gouge-em will charge for its cable services, earning them a profit of $$5150$10$$$$$15$O $20$320$320$320$320thousand.Total Cost($, Thousands)$$$$$$Profit($, Thousands)Now suppose the Backwater County Public Utility Commission has the data and believes that cable subscription rates in the county are too expensiveand that Gouge-em's profits are unfairly high.$What regulated price will the Backwater County Public Utility Commission set so that Gouge-em makes only a normal rate of return on its investment?$$$$$

To complete the table, we can calculate the total revenue, total cost, and profit using the given…

Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees and maintenance expenses. These fixed costs total $320,000 monthly. The marginal cost of adding another subscriber to its system is constant at $6 per month. Gouge-em's demand curve can be determined from the data in the accompanying table. Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices. Number of Subscribers Subscription Price (Thousands Per Month) $25 20 15 10 5 1 Gouge-em will charge $5 $10 20 $15 40 60 80 $20 100 150 Total Revenue ($, Thousands) $ $ $ $ $ $ Fixed Cost ($, Thousands) $320 $320 $320 $320 $320 $320 for its cable services, earning them a profit of $ Total Cost ($, Thousands) thousand. $ $ $ $ $ $ Now suppose the Backwater County Public Utility Commission has the data and believes that cable subscription rates in the county are too expensive and that Gouge-em's profits are unfairly high. Profit ($, Thousands) What regulated price will the Backwater County Public Utility Commission set so that Gouge-em makes only a normal rate of return on its investment? $ $ $ $ $ $

Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees and maintenance expenses. These fixed costs total $320,000 monthly. The marginal cost of adding another subscriber to its system is constant at $6 per month. Gouge-em's demand curve can be determined from the data in the accompanying table. Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices. Number of Subscribers Subscription Price (Thousands Per Month) $25 20 15 10 5 1 Gouge-em will charge $5 $10 20 $15 40 60 80 $20 100 150 Total Revenue ($, Thousands) $ $ $ $ $ $ Fixed Cost ($, Thousands) $320 $320 $320 $320 $320 $320 for its cable services, earning them a profit of $ Total Cost ($, Thousands) thousand. $ $ $ $ $ $ Now suppose the Backwater County Public Utility Commission has the data and believes that cable subscription rates in the county are too expensive and that Gouge-em's profits are unfairly high. Profit ($, Thousands) What regulated price will the Backwater County Public Utility Commission set so that Gouge-em makes only a normal rate of return on its investment? $ $ $ $ $ $

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 13CQ

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