A friend of yours is considering two movie streaming services. Provider A charges $120 per year for the service regardless of the number of movies streamed. Provider B does not have a fixed service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by the equation QD150-50P, where P is the price per movie. With Provider A, the cost of an extra movie is movie is with Provider B, the cost of an extra Given your friend's demand for movies and the cost of an extra movie with each provider, if your friend used Provider A, he would watch movies, and if he used Provider B, he would watch movies. This means your friend would pay with Provider B. for service with Provider A and for service

A friend of yours is considering two movie streaming services. Provider A charges $120 per year for the service regardless of the number of movies streamed. Provider B does not have a fixed service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by the equation QD150-50P, where P is the price per movie. With Provider A, the cost of an extra movie is movie is with Provider B, the cost of an extra Given your friend's demand for movies and the cost of an extra movie with each provider, if your friend used Provider A, he would watch movies, and if he used Provider B, he would watch movies. This means your friend would pay with Provider B. for service with Provider A and for service

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A friend of yours is considering two movie streaming services. Provider A charges $120 per year
for the service regardless of the number of movies streamed. Provider B does not have a fixed
service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by
the equation QD150-50P, where P is the price per movie.
With Provider A, the cost of an extra movie is
movie is
Given your friend's demand for movies and the cost of an extra movie with each provider, if your
friend used Provider A, he would watch
movies, and if he used Provider 8, he would watch
movies.
This means your friend would pay
with Provider B.
of
LM
Use the following graph to draw your friend's demand curve for movies. Then use the green
triangle to help you answer the questions that follow
Note: You will not be graded on any changes you make to the graph.
AM
AM
AME
M
With Provider B, the cost of an extra
Quantity of Moves
Your friend would obtain
surplus with Provider B.
for service with Provider A and
?
for service
in consumer surplus with Provider A and
In consumer
Given this information, which provider would you recommend that your friend choose?
Provider A
O Provider B

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