3. Consider the demand for broadband Internet service, given as follows: Q D = 224 – 4P, where Q is the number of subscribers in a given area

(in hundreds) and P is the price in dollars per month. This demand relationship is illustrated in the diagram on the right. Assume that the price of broadband service is $25 per month. Determine the following, paying particular attention to the units in which quantity is denominated:

a. The total number of subscribers at that price

b. The total amount paid by subscribers for broadband service, area B

c. The consumer surplus received by subscribers, area A

d. The total value to consumers of the broadband service they received, areas A and B

Transcribed Image Text:

Price (S/month) $56 25 A B 0 ? D Quantity of broadband services (100s of subscribers)