Sub: Economics Topic: Micro Economics
The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same inlieu of your academic submissions for grades.
Calculate the charges by assuming same monthly rental fee and unit price to allits customers.
An upstart phone company has only two potential large customers, Firm A and Firm B.
d for phone calls is Q1 = 2,800 − 200p (with p measured in
cents) and Firm 2’s isQ2 =5,000 − 100p. The marginal cost of providing a phone call is 6
cents. Assuming the phonecompany has to charge the same monthly rental fee and unit price to all its customers, at whatlevel should it set these charges?
This is a case of two part tariff.Price of call is set equal to its MC=6cents.Here the monthly rental charged will be the minimum of the consumer surplus (CS) of bothtypes of consumers.When P=6 then Q1=1600 and Q2=4400