Suppose in Baltimore there are two different internetproviders: Provider A and Provider B. Consider the following information about a consumer named Ted:

• Ted has the same demand equation for internetregardless of which company he uses(e.g. P = 100 - Q).
• No matter which company he chooses, he pays the sameaverageprice at both providers (e.g. P =20).
• However, he ultimately consumes two different quantities depending on whether he uses Provider A or Provider B.How is this possible?

To reward loyal customers,a local coffee shop called CafeNervosauses a declining price schedule. This price schedule has the first cup of coffee cost $20and every cup after costs $10.

Niles has demand for coffee at Cafe Nervosadescribed by Q =5-0.1P (or P = 50 - 10Q) where P is the price and Q is the quantity of cups of coffee.Answer the following questions:

A. (5 points) How many cups of coffee does Niles purchase?

B. (5 points) What is Niles's consumer surplus?

C. (5 points)Suppose there was a fixed fee of $100. Would this change Niles's Quantity purchased in part A? Explain and be specific.

A firm has the following total cost (TC) and marginal cost (MC) curves:

• TC = 600 + 50q + 6q³
• MC = 50 + 18q².

Answer the following questions:

1. (3points)What is the equation for the firm's average fixed cost?
2. (10points)What output level,q, minimizes averagevariablecost.