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Please explain the math behind this. Recently, an Internet service provider (ISP) in the UK implemented a no-strings US-style flat-rate plan whereby its commercial subscribers
Please explain the math behind this.
Recently, an Internet service provider (ISP) in the UK implemented a "no-strings US-style flat-rate plan" whereby its commercial subscribers can send and receive unlimited volume (measured in gigabytes) up to a cap of 10,000 gigabytes (per month) via their broadband Internet service for a flat monthly fee of 399.99. Under the old "metered plan," Alistair Willoughby Cook sent and received a grand total of 3,500 gigabytes over their broadband connection and paid 399.99 in usage fees in a typical 30-day month. If all customers are exactly like Alistair, what is the impact of the flat-rate plan on consumer welfare and the company's profits? Explain. The effect on consumer welfare and company profits is ambiguous. Consumer welfare decreases and the company may earn lower profits. The effect on consumer welfare is ambiguous and the company's profits increase. Consumer welfare increases and the company may earn lower profitsStep by Step Solution
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