Question
*I need help with letter c * Each business customer has the demandfunction: Q=15P, where Q is in millions of seconds permonth; each academic institution
*I need help with letter c*
Each business customer has the demandfunction: Q=15P, where Q is in millions of seconds permonth; each academic institution has thedemand: Q=12P.
The marginal cost to SC of additional computing is 2 cents persecond, regardless of volume.
a. Suppose that you could separate business and academic customers. What rental fee and usage fee would you charge eachgroup? What would be yourprofits?(Round all answers to the nearestinteger)
For businessusers, the rental fee would be $845,000 per month and the usage fee is 2 cents per second.
For academicinstitutions, the rental fee would be $500,000 per month and the usage fee is 2 cents per second.
SC's total profits are $13,450,000 per month.
b. Suppose you were unable to keep the two types of customers separate and charged a zero rental fee. What usage fee would maximize yourprofits? What would be yourprofits?
The profit maximizing usage fee is 7.75 cents per second. (round your answer to two decimalplaces)
SC's profits are $6,612,500 per month.(round your answer to the nearestdollar)
c. Suppose you set up onetwo-part tariffthat is, you set one rental and one usage fee that both business and academic customers pay. What usage and rental fees would youset? What would be yourprofits?
The profit maximizing rental fee is $??? per month (round your answer to the nearestdollar)
and the usage fee is ??? cents per second. (round your answer to one decimalplace)
SC's profits are $??? per month.(round your answer to the nearestdollar)
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