Suppose Always There Wireless serves 100 high-high demand wireless consumers,each of whose monthly demand curve for minutes of wireless service is and 300 low-demand consumers,each of whose monthly demand curve for minutes of wireless is ,where P is the per-minute price in dollars.Its marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.What is Always There Wireless's total profit?
A) $11,253
B) $12,052
C) $11,052
D) $8,452

Question

Suppose Always There Wireless serves 100 high-high demand wireless consumers,each of whose monthly demand curve for minutes of wireless service is  and 300 low-demand consumers,each of whose monthly demand curve for minutes of wireless is  ,where P is the per-minute price in dollars.Its marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.What is Always There Wireless's total profit?
A) $11,253 
B) $12,052 
C) $11,052 
D) $8,452

Quizplus · Accepted Answer

To find the profit, we need to find the quantity demanded at the given price of $0.35 per minute. 
For high-high demand customers: 
P = 0.35, Q = 100(800-11*0.35) = 77,430 
For low-demand customers: 
P = 0.35, Q = 300(800-16*0.35) = 70,740

Total revenue for Always There Wireless: 
TR = 0.35(77430+70740) = 50,745

Total cost for Always There Wireless: 
TC = 0.25(77430+70740) = 36,293.50

Total profit for Always There Wireless: 
Profit = TR - TC = 50,745 - 36,293.50 = 14,451.50

Therefore, the best choice is B with a total profit of $12,052.

Suppose Always There Wireless Serves 100 High-High Demand Wireless Consumers,each