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A local phone company has three family plans for its wireless service. Under each of these plans, the family gets two lines (phones) and can make local and long dis- tance (within the United States and Canada) calls for free so long as the total number of minutes used per month does not exceed the plan maximum. The price and maximum minutes per month for each plan are: Plan 1: 500 minutes for $50; Plan 2: 750 minutes for $62.50; and Plan 3: 1000 minutes for $75.00. Assuming that there are equal numbers of consumers in each group and that the value of a marginal minute for each group declines at the rate of $0.0004 per minute used, work out the demand curves consistent with this pricing. What surplus will each consumer group enjoy?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91710693

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