How much consumer surplus would be obtain with provider

Reference no: EM13236998

A friend of your is considering two cell phone service providers. Provider A charges $120 per month for the service regadless of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation Qd=150-50P, where P is the price of a minute.

a. With each provider, what is the cost to your friend of an extra minute on the phone?

b. In light of your answer to (a), how many minutes would your friend talk on the phone with each provider?

c. How much would he end up paying each provider every month?

d. How much consumer surplus would be obtain with provider?

e. Which provider would you recommend that your friend choice? Why?

Reference no: EM13236998

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