Belt Auction

Correction: What is the value of short run equilbrium and long price output?

ABCT, Inc., has been granted a limited-term exclusive license to operate a cable television system in Jackson, Wyoming. Recent operating experience in similar locations suggests a close relation between the monthly price for basic service and the number of subscribers. A. Complete the following table based on ABCT’s projected price, output, and monthly total cost data: Price($000)= 50, 40, 30, 25, 20, 15 Output(000)= 0, 1, 2, 3, 4, 5, TR= unknown MR($000)= unknown TC($000) = 0,20,40,60,80,100 MC= unknown note: Please Take note of the Three zero's in output and kindly explain what does it mean? B. Calculate the short-run equilibrium monopoly price/output combination and profit level. C. Calculate the long-run price/output combination and profit level if competitive bidding for the franchise resulted in a perfectly competitive market outcome.

Public Comments

1. P($000) Q(000) TR($000) MR($000) TC($000) MC($000) 50...........0............0.......... 0.............. 0........ 0 40...........1........40'000... 40'000....... 20........20 30...........2........60'000... 20'000....... 40........20 25...........3........75'000... 55'000....... 60........40 20...........4........80'000... 25'000....... 80........40 15...........5........75'000... 50'000...... 100.......60 P.S. ($000) means that these are measured in thousands dollars and (000) means that these are measured in thousands. B: Monopoly equilibrium price P($000)=20'000 and Q(000)=4'000 C: Competitive equilibrium price is lower than P($000)=20'000 and greater than Q(000)=4'000 P.P.S. But something is wrong in initial data, better check again. Added: P.P.P.S. Under perfect competition profit in long-run is zero, so total revenue should equal total costs or TR=TC toward maximal quantity but in your schedule there is no such combination. Or in this table some initial data is erroneous or table isn't completed and there should be extra rows with less price and greater quantity.