Problem 1: Compenium offers basic online television subscription service to rural customers.. The company faces the following kinked demand for its service:

Over the range of 0 to 20(000) customers per month:

P1 = $8 - $0.05Q

When output exceeds 20(000) customers per month:

P2 = $10 - $0.15Q

The company's total and marginal cost functions are as follows:

TC = $10 + $3Q + $0.0075Q2

where P is price (in dollars), Q is output (in thousands), and TC is total cost (in thousands of dollars).

A. What does the demand curve reveal about the market structure of this industry? What explains the shape of the demand curve?

B. Calculate price, output, and profits at the profit-maximizing level. C. Within what range could marginal costs vary without causing the firm to adjust price or output?