Question
1. In Exampleland, the marketing department of new online music service company Exemplify has conducted a study of its potential customers. This study has estimated
1. In Exampleland, the marketing department of new online music service company Exemplify has conducted a study of its potential customers. This study has estimated that the typical listener's monthly demand for music is given by Q(p) = 120 600, where Q is the number of tracks consumed per month and is the charge for playing a track, in dollars. Exemplify faces zero marginal cost of providing a customer access to an additional track.
a) Find Exemplify's optimal price per track if it does not charge a monthly subscription fee.
b) Find the company's optimal pricing strategy if it can charge a price per track, a monthly subscription fee, or some combination of both.
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