Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is Always There Wireless's profit from sales for each low-demand consumer? A) $27.63 B) $37.63 C) $21.13 D) $28.13

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Quizplus · Accepted Answer

The correct answer is A. The profit from sales for each low-demand consumer is $27.63.Explanation:The total demand curve is Qd = 200 - 100P for high-demand consumers and Qd = 100 - 100P for low-demand consumers. So, the total demand curve is Qd = 300 - 100P.The marginal cost is MC = $0.25 per minute.The profit-maximizing price is P = $0.35 per minute.The quantity demanded at this price is Q = 200 minutes for high-demand consumers and Q = 100 minutes for low-demand consumers. So, the total quantity demanded is Q = 300 minutes.The total revenue is TR = P * Q = $0.35 * 300 = $105.The total cost is TC = MC * Q = $0.25 * 300 = $75.The profit is π = TR - TC = $105 - $75 = $30.The profit from sales for each low-demand consumer is π/Q = $30/100 = $0.30.The fixed fee is F = P * Q - π = $0.35 * 100 - $30 = $27.63.

Suppose Always There Wireless Serves 100 High-Demand Wireless Consumers,who Each