Loyalist-Acadian Telephone, a crown corporation. provides telephone service to rural New Brunswick. In order to provide one unit of service at any time of day. the corporation must have one unit of xed capital in place. Each unit of capital. which costs $3 per unit per day. must be paid for only once per day. although it can be used to provide service at various times during the day. However, each unit of capital can be used to provide only one unit of service at any particular instant in time. In addition. the provision of telephone service entails the use of a variable input. which costs $2 for each unit of service provided. This cost is incurred each time a unit of service is supplied. L-A Tel has identied two different time periods during which telephone service is used. The quantities of service demanded (daily) during these periods are 9;\" (P) = 5002513. 93\"\" (P) = 300 25P The government has imposed a break-even requirement on L-A Tel (total revenues from users must be sufficient to cover total costs]. Antoine-Joseph Leblanc. the VP in charge of operations. has decided to set prices according to the Steiner Peak-Load Pricing model. He has calculated the optimal prices PPEAK and POFF'PK. What is the total surplus [this is all consumers' surplus} when the rm uses the optimal combination of peak-load and off-peak prices? (1) Total Surplus at least $2,500 but less than $3,500 (2) Total Surplus at least $4,500 but less than $5,500 ( 3) Total Surplus at least $5,500 (4) Total Surplus at least $3,500 but less than $4,500 5) Total Surplus less than $2,500Lovalist-Acadian Telephone, a crown corporation. provides telephone service to rural New Brunswick. In order to provide one unit of service at any time of day, the corporation must have one unit of xed capital in place. Each unit of capital, which costs $3 per unit per day, must be paid for only once per day, although it can be used to provide service at various times during the day. However, each unit of capital can be used to provide only,Ir one unit of service at any.r particular instant in time. In addition. the provision of telephone service entails the use of a variable input. which costs $2 for each unit of service provided. This cost is incurred each time a unit of service is supplied. L-A Tel has identied two different time periods during which telephone service is used. The quantities of service demanded {daily} during these periods are 9;\" (P) = 500 2519, 93%\" (P) = 300 251? The government has imposed a break-even requirement on L-A Tel (total revenues from users must be sufcient to cover total costs]. The newest member of the Board of Directors, Gabrielle Comeau, proposes that, "in the interest of fairness to all users.'I L-A Tel should charge the same, uniform. price for telephone service during all time periods. If the uniform price is chosen such that the nn's revenue is to equal its cost of providing the total quantity:r of service demanded at the uniform price. what will be the total surplus {this is all consumers' surplus} to all users combined? Loyalist-Acadian Telephone, a crown corporation. provides telephone service to rural New Brunswick. In order to provide one unit of service at any time of day. the corporation must have one unit of xed capital in place. Each unit of capital. which costs $3 per unit per day. must be paid for only once per day. although it can be used to provide service at various times during the day. However, each unit of capital can be used to provide only one unit of service at any particular instant in time. In addition. the provision of telephone service entails the use of a variable input. which costs $2 for each unit of service provided. This cost is incurred each time a unit of service is supplied. L-A Tel has identied two different time periods during which telephone service is used. The quantities of service demanded (daily) during these periods are 9;\" (P) = 500 25p, 93\"\" (P) = 3002510 The government has imposed a break-even requirement on L-A Tel (total revenues from users must be sufcient to cover total costs). Suppose that Ms. Comeau's uniform price (previous question} had been used. but the rm was contemplating a change to M. LeBlanc's peak-load pricing scheme {Question 3}. After computing surplus to each affected group under each pricing scheme. determine whether or not a change to peak-load pricing would result in a Pareto improvement. and why {or why not). (1) Change to peak-load pricing would not generate a Pareto improvement--while peak users would be better off under peak-load pricing, off-peak users would be worse off (off-peak users would prefer uniform pricing). (2) Change to peak-load pricing would not generate a Pareto improvement--while off-peak users would be better off under peak-load pricing, peak-period users would be worse off (peak period users would prefer uniform pricing). (3) Change to peak-load pricing would generate a Pareto improvement as both peak and off- peak users would be better off under peak-load pricing. 4) Change to peak-load pricing would NOT generate a Pareto improvement as both peak and off-peak users would be made worse off under peak-load pricing. 5) Change to peak-load pricing would generate a Pareto improvement as total surplus to all users is higher under peak-load pricing