Order the answer to: Sal’s satellite company broadcasts TV to subscribers in Los Angeles

Order the answer to: Sal’s satellite company broadcasts TV…

Question	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……………….QLA ? 100 ? 0.50PLA where 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. a. What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? b. As a consequence of a new satellite that the Pentagon recently deployed, people in Los Angeles receive Sal’s New York broadcasts, and people in New York receive Sal’s Los Angeles broadcasts. As a result, anyone in New York or Los Angeles can receive Sal’s broadcasts by subscribing in either city. Thus Sal can charge only a single price. What price should he charge, and what quantities will he sell in New York and Los Angeles? c. In which of the above situations, a or b, is Sal better off? In terms of consumer surplus, which situation do people in New York prefer and which do people in Los Angeles prefer? Why?
Subject	business economics

Question

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……………….QLA ? 100 ? 0.50PLA
where 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.
a. What are the profit-maximizing prices and quantities for the New York and Los Angeles markets?
b. As a consequence of a new satellite that the Pentagon recently deployed, people in Los Angeles receive Sal’s New York broadcasts, and people in New York receive Sal’s Los Angeles broadcasts. As a result, anyone in New York or Los Angeles can receive Sal’s broadcasts by subscribing in either city. Thus Sal can charge only a single price. What price should he charge, and what quantities will he sell in New York and Los Angeles?
c. In which of the above situations, a or b, is Sal better off? In terms of consumer surplus, which situation do people in New York prefer and which do people in Los Angeles prefer? Why?

Subject

business economics

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