A friend of yours is considering two movie-streaming services. Provider A charges $120 per year 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 Qd = 150 - 50P, where P is the price per movie. (a) with each provider, what is the cost to your friend of an extra movie? (b) In light of your answer to (a), how many movies with each provider would your friend watch? (c) How much would she end up paying each provider every year? (d) How much consumer surplus would she obtain with each provider? (Hint: Graph the demand curve and recall the formula for the area of a triangle.) (e) Which provider would you recommend that your friend choose? Why?

A friend of yours is considering two movie-streaming services. Provider A charges $120 per year 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 Qd = 150 - 50P, where P is the price per movie. (a) with each provider, what is the cost to your friend of an extra movie? (b) In light of your answer to (a), how many movies with each provider would your friend watch? (c) How much would she end up paying each provider every year? (d) How much consumer surplus would she obtain with each provider? (Hint: Graph the demand curve and recall the formula for the area of a triangle.) (e) Which provider would you recommend that your friend choose? Why?

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 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 Qd = 150 - 50P, where P is the price per movie. (a) With each
provider, what is the cost to your friend of an extra movie? (b) In light of your answer to (a), how many movies with each
provider would your friend watch? (c) How much would she end up paying each provider every year? (d) How much
consumer surplus would she obtain with each provider? (Hint: Graph the demand curve and recall the formula for the
area of a triangle.) (e) Which provider would you recommend that your friend choose? Why?

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