John Gardener is the city planner in a med size company. The city is considering a proposal to award an exclusive contract to clear vision inc. A cable television carrier. Mr gardener has discovered that an economic planner hired a year beforehas generated the demand, marginal revenue, total cost and marginal cost functions given below:
P=28-0.0008Q
MR=28-0.0016Q
TC=120000+ 0.00062Q^2
MC=0.0012Q
Where Q is the number of cable subscribers and P= the price of basic monthly service. Conditions change slowly in the community so that john considers the cost and demand functions to be reasonably valid for present condition. John knows relatively little economics and has hired you to answer.
A) assuming clear vision can achieve economies of scale by being the only firm in the industry, wat type of market is CLEAR VISION operating in?
B) what price and quantity would be expected if the firm is allowed to operate completely unregulated?
C) john has asked you to recommend a price and quantity that would be socially efficient. Recommend a price and quantity to John using economic theory to justify your answer.