Suppose Always There Wireless serves 100 high-high demand wireless consumers,each of whose monthly demand curve for minutes of wireless service is and 300 low-demand consumers,each of whose monthly demand curve for minutes of wireless is ,where P is the per-minute price in dollars.Its marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will high-demand consumers purchase?
A) 60
B) 30
C) 70
D) 170

Question

Suppose Always There Wireless serves 100 high-high demand wireless consumers,each of whose monthly demand curve for minutes of wireless service is  and 300 low-demand consumers,each of whose monthly demand curve for minutes of wireless is  ,where P is the per-minute price in dollars.Its marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will high-demand consumers purchase?
A) 60 
B) 30 
C) 70 
D) 170

Quizplus · Accepted Answer

The high-demand consumers have a demand curve of Qh = 100 - 0.5Ph, where Qh is the quantity of minutes demanded and Ph is the price per minute. At a price of $0.30 per minute, the quantity demanded by high-demand consumers can be found by setting Ph = 0.30 and solving for Qh:

Qh = 100 - 0.5(0.30) = 85

Therefore, high-demand consumers will purchase 85 minutes.

Note that the price is above the marginal cost of $0.25 per minute, so the firm is making a profit on each minute sold to high-demand consumers.

Suppose Always There Wireless Serves 100 High-High Demand Wireless Consumers,each