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Suppose that a typical household's demand for long-distance call is represented by the equation D= 200-4p+0.4ywhere D is the quantity demanded in minutes a month,
Suppose that a typical household's demand for long-distance call is represented by the equation D= 200-4p+0.4ywhere D is the quantity demanded in minutes a month, p is the price of calls in cents per minute, and Y is the household's income in thousands of dollars a year. Assume that Y=200.
- Draw the household's demand curve.
- How many minutes will the household buy at the price of 25 cents a minute?
- What is the maximum lump sum that a long-distance carrier can charge the household for a package of 140 minutes of calls?
- How can the long-distance carrier charge the household when it uses the two-part pricing method instead of package deal?
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