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Tom, the monopoly provider of a town's cable TV service, has set the current cable subscription...

Tom, the monopoly provider of a town's cable TV service, has set the current cable subscription price at $20 per month. To attract one more subscriber, he needs to lower his price to $19.95. What is of the effect on Tom's marginal revenue from that additional subscriber?

a. Tom's marginal revenue equals $19.95.

b. Tom's marginal revenue is greater than $19.95.

c. Tom's marginal revenue is less than $19.95.

d. Tom's marginal revenue is between $19.95 and $20
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Answer #1

Answer : option C)

for a monopolist, Price is always higher than MR

As at MONOPOLY eqm, MR = MC

& Price is found from demand Curve,

& This P > MR,

So if P = 19.95, then MR will be less than 19.5

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