DStv South Africa's satellite company broadcasts TV to subscribers in urban areas (U) and rural areas...

 

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DStv South Africa's satellite company broadcasts TV to subscribers in urban areas (U) and rural areas (R). The demand functions (which are average revenue curves) for these two markets (groups of consumers) are: Pu= 2404Qu and PR = 200-2QR where Q is in thousands of subscriptions per year and P is the subscription price per year. DStv's cost function (C) of providing Q units of service is given by: C= 1000+40Q where Q= Qu + QR, implying that the marginal cost is 40. 4.1 Calculate the profit-maximizing prices and quantities for the urban and rural markets (note: profit- maximising condition is MR = MC). (4) 4 4.2 The demand functions for Urban and Rural that are provided in the question show that DStv can price discriminate and is price discriminating. State the type of price discrimination that DStv is practicing and discuss the conditions necessary for a successful price discrimination. (4) DStv South Africa's satellite company broadcasts TV to subscribers in urban areas (U) and rural areas (R). The demand functions (which are average revenue curves) for these two markets (groups of consumers) are: Pu= 2404Qu and PR = 200-2QR where Q is in thousands of subscriptions per year and P is the subscription price per year. DStv's cost function (C) of providing Q units of service is given by: C= 1000+40Q where Q= Qu + QR, implying that the marginal cost is 40. 4.1 Calculate the profit-maximizing prices and quantities for the urban and rural markets (note: profit- maximising condition is MR = MC). (4) 4 4.2 The demand functions for Urban and Rural that are provided in the question show that DStv can price discriminate and is price discriminating. State the type of price discrimination that DStv is practicing and discuss the conditions necessary for a successful price discrimination. (4)

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41 In order to determine the prices and quantities that will result in the greatest amount of profit being generated by sales in the urban and rural markets we need to first compute the marginal reven... View the full answer