Essay
(Table: Ultimate Fighting Marginal Benefit) Ultimate fighting, or mixed martial arts, is a rapidly growing spectator sport, and most bouts are available on a pay-per-view basis from local cable companies.The marginal cost of making the bout available to one additional consumer is zero.The table Ultimate Fighting Marginal Benefit refers to a viewing of the upcoming championship bout.a) If all five fans could view the fight without paying, how many would do so, and what would be the total consumer surplus to those consumers?
b) If the cable company charges $20 to view the championship bout, which consumers will pay to view it? What is the total consumer surplus for those fans? What is the total producer surplus for the cable company? How large is the deadweight loss from this pricing strategy?
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a) All five fans will view the fight.Con...View Answer
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