The table below shows the total demand for cable TV subscriptions for a monopoly. Assume that...

The table below shows the total demand for cable TV subscriptions for a monopoly. Assume that the monopolist incurs an annual fixed cost of $100,000 and that the marginal cost of providing an additional subscription is always $100.

Quantity	Price (per year)
0	$400
2,000	$350
4,000	$300
6,000	$250
8,000	$200
10,000	$150
12,000	$100
14,000	$50
16,000	$0

What is the profit-maximizing level of quantity and price? What is the profit at this level of output? Explain your answers using the concept of marginal revenue and marginal cost.
The following table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B).

		B
		Right	Left
A	Up	(2, 2)	(3, 3)
A	Down	(1, 1)	(4, 0)

Critically analyze the following (remember to justify your answers):

Is Up-Right a Nash equilibrium? (1 mark)
Is Up-Left a Nash equilibrium? (1 mark)
Is Down-Right a Nash equilibrium? (1 mark)
Is Down-Left a Nash equilibrium? (1 mark)

Expert Solution

Rahul Sunny answered 3 years ago

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