What surplus will each consumer group enjoy

Assignment Help Business Economics

Reference no: EM131001877

A local phone company has three family plans for its wireless service. Under each of these plans, the family gets two lines (phones) and can make local and long dis- tance (within the United States and Canada) calls for free so long as the total number of minutes used per month does not exceed the plan maximum. The price and maximum minutes per month for each plan are: Plan 1: 500 minutes for $50; Plan 2: 750 minutes for $62.50; and Plan 3: 1000 minutes for $75.00. Assuming that there are equal numbers of consumers in each group and that the value of a marginal minute for each group declines at the rate of $0.0004 per minute used, work out the demand curves consistent with this pricing. What surplus will each consumer group enjoy?

Reference no: EM131001877

Questions Cloud

Decrease GDP using the expenditure approach : If exports are greater than imports, would this increase or decrease GDP using the expenditure approach? What does this mean? Explain in words and with a graph what will lead to a decrease in the quantity supplied. Be specific.

List and describe the four types of unemployment : List and describe the four types of unemployment. Using the expenditure approach, give an equation for GDP. Now explain it. If the CPI for 2006 was 170 and the CPI for 2007 is 204, what is the current inflation rate?

Morning coffee with milk : Boris budgets $9/week for his morning coffee with milk. He likes it only if it is prepared with 4 parts coffee and 1 part milk. Coffee costs $1/oz, milk $0.50/oz. How much coffee and how much milk will Boris buy per week? How will your answers change..

Consumption of music increases : Dusty derives utility from 3 goods: music (M), wine (W), and cheese (C). His utility function is given by: u(M,W,C) = M + 2W + C. Show that Dusty’s MRS of wine for cheese is constant for all values of W and C on the indifference curves calculated in ..

What surplus will each consumer group enjoy : A local phone company has three family plans for its wireless service. Under each of these plans, the family gets two lines (phones) and can make local and long dis- tance (within the United States and Canada) calls for free so long as the total numb..

What are the ethical issues raised : CASE: BUYING A CALCULATOR As a student you are on a very limited personal budget, but your research group has a very large budget for supplies. Next semester you will be taking a course in which a calculator with graphics capabilities will be require..

Economic growth does not depend on how much people save : Economic growth does not depend on how much people save or businesses invest, only on how much they consume. Which of the following is NOT included in our calculation of GDP? Suppose a farmer buys $100 worth of seed, $50 worth of fertilizer, and $100..

What is the current level of unemployment-inflation-growth : What is the current level of unemployment? Inflation? Growth? What are the only 2 ways to increase the growth rate of the Economy? What are the three goals of Macroeconomic policy? Please provide a brief description of each.

When output is at its potential : When output is at its potential:

User Account

All Pages