Question
Suppose there are two types of consumers who use cell phones. The demand of type 1 consumers (low demand consumers) is P = 10 -
Suppose there are two types of consumers who use cell phones. The demand of type 1 consumers (low demand consumers) is P = 10 - Q; the demand of type 2 consumers (high demand consumers) is P = 14 - Q, where Q is the number of hours of cell phone calls per month. Suppose the phone company wants to offer two plans: the first plan, designed for the low demand consumers, offers six hours of calling (Q1=6 and no price per unit) for a fixed monthly fee of F1. The second plan, designed for the high demand consumers, offers unlimited calls at a fixed monthly fee F2 (again, no price per unit is charged). Determine the optimal choice of F1 and F2
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started