Microeconomics Question:

SiriusXM is the only satellite radio provider in North America. Suppose its marketing department has conducted a survey of customers and potential customers and found that there are two types of consumers: A and B. There are 20 million of type A and 10 million of type B. The table below summarizes their willingness to pay per month for a "select\" package with 140 stations, and an "all-access\" package with those stations plus two Howard Stern channels, every NFL and MLB game and every NASCAR race: consumer type "select\" "all-access\" A $25 $30 3 $17 $20 The marginal cost of providing an additional customer with satellite radio service is zero. Assume that whenever a consumer is exactly indifferent between two packages or plans, it selects the one with the greater number of channels. Consider the following pricing strategies (all prices are monthly): i) offer "select\" for $17 and "all-access\" for $30. ii) offer "select\" for $17 and "all-access\" for $20. iii) offer "select\" for $25 and "all-access\" for $30. a) Which of the pricing strategies above would result in the highest profit for SiriusXM? How many subscribers would it have, and how many would select each package? Why? b) Can you design a new pricing strategy that raises even more profit? Why or why not? Explain your answer intuitively and show it works mathematically. c) How would your answers to the questions above (in both (a) and (b)) change if, instead, there were 20 million type A consumers and 20 million type B consumers? Explain