This graph shows the demand for cable TV services in a town of 50,000 households. The local government has given a monopoly franchise to a cable company. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for cable TV services. Notice that the firm’s monthly marginal cost is constant at $10 per household. Assume that in the long run, the cable company can avoid any fixed costs if it stops providing service in this community.
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