Answer to Question #305455 in Microeconomics for saanvi

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.