The accompanying table shows six consumers’ willingness to pay (his or her individual marginal benefit) for one MP3 file copy of a Jay-Z album. The marginal cost of making the file accessible to one additional consumer is constant, at zero.
Consumer Individual marginal benefit
Adriana…………………………… $2
Bhagesh…………………………… 15
Chizuko…………………………… 1
Denzel…………………………….. 10
Emma……………………………… 5
Frank………………………………. 4
a. What would be the efficient price to charge for a download of the file?
b. All six consumers are able to download the file for free from a file-sharing service, Pantster. Which consumers will download the file? What will be the total consumer surplus to those consumers?
c. Pantster is shut down for copyright law infringement. In order to download the file, consumers now have to pay $4.99 at a commercial music site. Which consumers will download the file? What will be the total consumer surplus to those consumers? How much producer surplus accrues to the commercial music site? What is the total surplus? What is the deadweight loss from the new pricing policy?