Suppose Wilwaukee Telecom offers its users the option of paying either

(a) $2.00 per minute for telephone service or

(b) a $125 flat charge for a year of unlimited toll-free calls. Consider a customer with an annual demand for telephone service of P = 11 — 0.1Q, where P is the price per minute and Q is the number of minutes of calls made per year. How many minutes of calls would this customer make under plan (a)? How many minutes of calls would he or she make under plan (b)? Calculate the consumer surplus for each of the plans (a) and (b).

Answer rating: 100% (QA)

a Under plan 1 when P is 2 total number of minutes 11 201 ... View the full answer