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M3. [25 points] Scanio is an app that converts photos into scans. Consumers use it to convert photos of documents into clear, readable pdf les.
M3. [25 points] Scanio is an app that converts photos into scans. Consumers use it to convert photos of documents into clear, readable pdf les. Assume downward sloping Marginal Willingness to Pay (MWTP) for scans for all individuals. When the price per scan via the app is $0.1, Nico converts 50 photos into scans in a month. Solution: Nico chooses his quantity based on MWTP(Q) vs MC. His MC is zero under the new pricing scheme. As he buys 50 scans when the price is $0.1 we know that he will buy more than 50 scans when the MC is zero with downward sloping MWTP. The xed fee has no effect on his quantity choice, just on his decision to purchase the pricing scheme or not based on total benets vs. total costs. ) [9 points] Scanio changes the pricing scheme yet again. For a monthly fee of $7, Nico can scan as many photos as he wants for free. Nico signs up for this pricing scheme. Claim: Nico scans fewer photos than 50 photos a month under the new scheme. Agree, Disagree or It depends? Explain your reasoning. A diagram is not an explanation. Your explanation needs to be sufficient without a diagram
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