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Direct TV is deciding how to price its service. Assume there is no competition in this market. The marginal cost to Direct TV is assumed
Direct TV is deciding how to price its service. Assume there is no competition in this market. The marginal cost to Direct TV is assumed to be zero. The following table describes the preferences of the representative consumer Movies per year Total Willingness to Pay ($) 1 25 2 48 3 69 4 88 5 105 6 120 7 133 8 144 9 153 10 160 11 165 12 168 13 169 14 169 For example, the second row implies that the consumer would get $48 worth of happiness (in total) by watching his or her two favorite movies. If Direct TV charged an annual flat fee entitling the subscriber to watch unlimited movies, rather than charging pay-per-movie price (simple pricing), what would be the maximum annual flat fee it could charge
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