Question
Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groupsare: QNY=700.25PNY QLA=1100.5PLA where
Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groupsare:
QNY=700.25PNY
QLA=1100.5PLA
where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by
C=1000+40Q
where Q= QNY+ QLA.
a.What are theprofit-maximizing prices and quantities for the New York and Los Angelesmarkets? (round all answers to two decimalplaces)
In NewYork, the equilibrium quantity is _____subscribers at an equilibrium price of $_____.
While in LosAngeles, the equilibrium quantity is _____subscribers at an equilibrium price of $_____.
b.As a consequence of a new satellite that the Pentagon recentlydeployed, people in Los Angeles receiveSal's New York broadcasts and people in New York receiveSal's Los Angeles broadcasts. As aresult, anyone in New York or Los Angeles can receiveSal's broadcasts by subscribing in either city. Thus Sal can charge only a single price. What price should hecharge, and what quantities will he sell in New York and LosAngeles?
The equilibrium price would be $______, and Sal would have ____subscribers in New York and ______subscribers in Los Angeles.
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