The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at
A) $8.
B) $6.
C) $4.
D) None of the above prices force Bigshow to incur an economic loss.
C
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Traffic congestion represents
a. A positive network externality b. A negative network externality c. A Bandwagon effect d. Neither a positive nor a negative externality snob effect; congestion
Suppose that OPEC currently sets the oil price at $1.50 per gallon, and the current consumption is 100 million gallons per day. The price elasticity of demand for oil is estimated to be 0.7 by the initial value method. If OPEC raises the oil price to $1.80 per gallon:
A. quantity demanded decreases by 10 million gallons while total sales revenue increases by $4.4 million per day. B. quantity demanded decreases by 14 million gallons while total sales revenue increases by $4.8 million per day. C. quantity demanded decreases by 10 million gallons and total sales revenue decreases by $4.4 million per day. D. quantity demanded decreases by 14 million gallons and total sales revenue decreases by $4.8 million per day.