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Most cable television companies currently require customers

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Most cable television companies currently require customers [#permalink]

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13 Sep 2008, 02:56
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Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

(A) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
(B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
(C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
(D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
(E) Whether a la carte subscribers would be required to have new television set-top boxes
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13 Sep 2008, 10:57
dancinggeometry wrote:
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

(A) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure

Does not tell any thing about whether the costs to consumers will go up/down

(B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure

Does not tell any thing about whether the costs to consumers will go up/down

(C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually

Exactly, if many people change to AL from bundled, they might save more money. Good Answer

(D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers

Possible that they recieve bundled packages from their providers but we are concerned about consumers not Cable TV folks

(E) Whether a la carte subscribers would be required to have new television set-top boxes

Irrelevant

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13 Sep 2008, 12:49
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13 Sep 2008, 13:31
dancinggeometry wrote:
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

(A) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
(B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
(C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
(D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
(E) Whether a la carte subscribers would be required to have new television set-top boxes

ANS is C. C rephrases the cost saving in another way.
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15 Sep 2008, 15:40
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15 Sep 2008, 19:13
dancinggeometry wrote:
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

(A) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure -> its not about number of channels but about price being less !!! but its a strong contender C is better than A
(B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure -> out of scope.not discussed
(C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually -> this sounds good since this proves the consumers claim that they actually want to selectively buy and thus pay less money IMO C -0> lesser the number of channels less is the cost
(D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers -> IRRELEVANT
(E) Whether a la carte subscribers would be required to have new television set-top boxes -> IRRELVANT

IMO C
PR1 => Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels.
PR2=> the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers.
Concl => industry claims that current package system is economical
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15 Sep 2008, 19:30
IMO C.
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16 Sep 2008, 10:40
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Re: Zumit CR 007   [#permalink] 16 Sep 2008, 10:40
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