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AT&T offers Internet, mobile telephone services, landline telephone services, and digital TV. Consider two different segments, the Millennial and Traditional, with willingness to pay
AT&T offers Internet, mobile telephone services, landline telephone services, and digital TV. Consider two different segments, the Millennial and Traditional, with willingness to pay for different products and market share shown here. Assume a market size of 50 million homes. Mobile+ Internet Market Segment Willingness to Pay Phone +TV Willingness to Pay Market Share Millennial $95 $25 30% Traditional $30 $115 70% Scenario A: Consider an AT&T price menu of two packages, one of Mobile 1 Internet for $95 and the other of Phone 1 TV for $115. Scenario A: Consider an AT&T price menu of two packages, one of Mobile 1 Internet for $95 and the other of Phone 1 TV for $115. 1. Calculate the consumer surplus for each segment with each offering (Consumer Surplus 5 Price 2 Willingness to Pay). 1. Calculate the revenue earned from each offering and market segment in millions of dollars. (Assume that if the consumer surplus is zero or positive for a given segment and offering, the segment purchases. Calculate revenue as the product of price, market share, and overall market size if the segment purchases.) 1. What is the total revenue earned under this scenario?
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