1. Global Cell Services,Inc.is a wireless services company with a monthly demand for cell phone minutes for each client that can be expressed as follows:

P=$2.7-0.04Q

Where P is the price paid by the client per minute and Q is the number of minutes bought by the client each month.

The marginal cost is$0.30per minute.

Assume thatGlobal CellServices,Inc.offersa single per minute price,which means that the price per minute is the same for all clients,regardless of the number of minutes they actually use each month

• What is the profit-maximizing quantity and price?(5points)
• What is the profit perclient?(2.5points)
• What is the consumersurplus?(2.5points)

Assume now thatGlobal CellServices,Inc.offersa two-part tariff with a monthly fixed fee and a per minute charge.

• What is the optimal two-part tariff?(5points)
• What is the cost per client per month?(2points)
• What is the revenue per client per month?(2points)
• What is the profit per client per month?(1point)