438 PART • Market Structure and Competitive Strategy as high if we offered the Sports Channel and the Movie Channel together as a bundle, and only as a bundle.” Do you agree or disagree? Explain why d Suppose the cable company continues to use mixed bundling to sell these two services Based on the distribution of reservation prices shown in Figure 11.21, you think the cable company should alter any of the prices that it is now charging? If so, how? *17 Consider a firm with monopoly power that faces the demand curve P = 100 - 3Q + 4A1/2 and has the total cost function C = 4Q2 + 10Q + A where A is the level of advertising expenditures, and P and Q are price and output a Find the values of A, Q, and P that maximize the firm’s profit b Calculate the Lerner index, L ϭ (P − MC)/P, for this firm at its profit-maximizing levels of A, Q, and P