Refer to Scenario 13.2 below to answer the question(s) that follow.
SCENARIO 13.2: The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is
P=55-0.01
Q, where
Q is the number of households that would subscribe to the cable service and
P is the monthly fee charged to the subscribers. The associated marginal revenue curve is
MR=55-0.02
Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of $5 for providing cable service to each household.
Refer to Scenario 13.2. At what level of output (number of households) is Fun Cable Company's total revenue maximized?
◦ 2,500
◦ 2,750
◦ 5,000
◦ Indeterminate from the given information.
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