Sal’s satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY = 60 – 0.25PNY and QLA = 100 – 0.50PLAwhere Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 40Q where Q = QNY + QLA. Which of the following statements is correct?
Sal’s satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY = 60 – 0.25PNY and QLA = 100 – 0.50PLAwhere Q is in thousands of subscriptions per year and P is the subscription price per year.
The cost of providing Q units of service is given by C = 1000 + 40Q where Q = QNY + QLA.
Which of the following statements is correct?
Note: These demand equations must be converted into inverse demand equations in order to solve this question.
A.
The profit maxmizing quantity in New York is 50 and the profit maximizing price in New York is $100.
B.
The profit maxmizing quantity in New York is 15 and the profit maximizing price in New York is $140.
C.
The profit maxmizing quantity in New York is 25 and the profit maximizing price in New York is $140.
D.
The profit maxmizing quantity in New York is 25 and the profit maximizing price in New York is $100.
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