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A friend of yours is considering two movie-streaming services. Provider A charges $120 per year regardless of the number of movies streamed. Provider B does
A friend of yours is considering two movie-streaming services. Provider A charges $120 per year regardless of the number of movies streamed. Provider B does not have a fixed service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by the equation Qd=150-50P , where P is the price per movie. With each provider, what is the cost to your friend of an extra movie? In light of your answer to (a), how many movies with each provider would your friend watch? How much would she end up paying each provider every year? How much consumer surplus would she obtain with each provider? Which provider would you recommend that your friend choose? Why
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