Firm A is planning to rollout a new nationwide wireless telephone service next month. Its potential customers are either light users or regular users and these exist in equal proportion in the population. The firm must decide between offering a plan with 300 minutes, 600 minutes, or offering both plans. Each of these options costs the firm $10 to provide, and consumers’ willingness to pay is given below: (Image Attached)
Each potential customer calculates the net payoff (benefit minus
a) What prices should the firm set if it wants to offer both plans, such that light users purchase the 300 minute plan and regular users purchase the 600 minute plan?
b) How much higher is a regular user’s payoff under the scenario in part (a) above than if the firm could perfectly
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