Question

1.     You are considering two cable networks for your television. Tata Sky charges Rs 120 per month regardless of the channels watched. Hathway on the other hand charges Rs 1/channel per month.                                Your monthly channel demand is given by the equation CD = 150-50P, where P is the price per channel.

 

A.    How many channels per month will you watch with each network?

 Based on consumer surplus obtained, which provider should you choose.

Answer 1

Tatasky charges Rs. 120 per month regardless of the channels watched.

Hathway on the other hand charges Rs. 1/ channel per month.

$CD = 150 – 50P$

$P = Rs 1$

$=> CD = 150 - 50$

$=> CD = 100$

$Hence \space100\space Channel \space Watched$

100 channels per month will be Watched per month

$So, \space Charges = 100 \times 1 = 100 Rs \space for \space Hathway$

Tatasky charges $Rs. \space 120 \space per \space month$

In this case, I will choose Hathway since is the better option.