The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. 2.4) What is the most Fun Cable Company would bid for the franchise? Working calculation: 2.5) At what level of output (number of households) is Fun Cable Company's total revenue maximized? Working calculation:
The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household.
2.4) What is the most Fun Cable Company would bid for the franchise?
Working calculation:
2.5) At what level of output (number of households) is Fun Cable Company's total revenue maximized?
Working calculation:
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