Suppose you are the manager for Horizon, a telecommunication company. Market research has shown that the demand by a typical customer for the product you sell (Q is a GB of data transfers) is given by: P = $5-0.250 From your production department, you are told that the variable costs of production are given by: VC(Q)= $20 a. If you decide to offer the product for sale to all buyers at a single price, what price will you charge and how much will you sell to a typical customer? b. What profits per consumer will you earn under this pricing strategy? c. Now suppose you decide to use a simple block pricing strategy. What happens to revenues if you charge $4.25/GB for the first 3 GBs, $3.50/GB for the next 3 GBs and $2.50/GB for the next block of 4 GBs? d. What profits per consumer will the firm earn under this pricing strategy? e. Compare the profits under the two pricing strategies. Comment on the comparison.

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