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Figure 13.7 Assume Shaw Cable Has a Monopoly to Provide Cable TV

Question 21

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Figure 13.7
Figure 13.7 Assume Shaw Cable has a monopoly to provide cable TV in Vancouver. Figure 13.7 shows the cable television market in Vancouver. -Refer to Figure 13.7.Suppose the local government imposes a $2.50 lump sum per month tax on cable companies.What happens to the price charged by the cable company following the imposition of this tax? A) The price rises from PM to (PM + $2.50) . B) The price rises from PM but it increases by an amount less than $2.50. C) The price rises from PM but it increases by an amount greater than $2.50 to reflect the monopoly's markup. D) The price remains at PM.
Assume Shaw Cable has a monopoly to provide cable TV in Vancouver. Figure 13.7 shows the cable television market in Vancouver.
-Refer to Figure 13.7.Suppose the local government imposes a $2.50 lump sum per month tax on cable companies.What happens to the price charged by the cable company following the imposition of this tax?


A) The price rises from PM to (PM + $2.50) .
B) The price rises from PM but it increases by an amount less than $2.50.
C) The price rises from PM but it increases by an amount greater than $2.50 to reflect the monopoly's markup.
D) The price remains at PM.

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