Respuesta :
Answer:
The correct option is d. 100; $15; $1,000.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
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 175 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.
Use Scenario: A Small-Town Monopolist. If this monopolist must choose between selling 100 or 175 subscriptions, it will choose to sell _____ units at a price of _____ and earn economic profits equal to _____.
Explanation of the answer is now given as follows:
Step 1: Calculation of profit when 100 subscriptions is sold
Total revenue = Number of subscriptions sold * Price a week = 100 * $15 = $1,500
Total cost = Number of subscriptions sold * MC a week = 100 * 5 = $500
Economic profit = Total revenue - Total cost = $1,500 - $500 = $1,000
Step 2: Calculation of profit when 175 subscriptions is sold
Total revenue = Number of subscriptions sold * Price a week = 175 * 10 = $1,750
Total cost = Number of subscriptions sold * MC a week = 175 * 5 = $875
Economic profit = Total revenue - Total cost = $1,750 - $875 = $875
Conclusion
Since the economic profit of $1,000 made when 100 subscriptions is sold is higher than the economic profit of $875 made when 175 subscriptions is sold, thee monopolist will choose to sell 100 units at a price of $15 and earn economic profits equal to $1,000.
Therefore, the correct option is d. 100; $15; $1,000.
