How much consumer surplus would obtain with each provider

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Reference no: EM13236924

A friend of yours is considering two cell phone service providers. Provider A charges $120 per month for the service regardless of the number of phone calls made. Provider B doe 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 he obtain with each provider?

Reference no: EM13236924

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