Question

You are considering two cable networks for your television. Tatasky 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 channe​

Answer 1

Given : Tatasky 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.

To Find : (i) How many channels per month will you watch with each network?

(ii) Based on consumer surplus obtained, which provider should you choose

Solution:

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 100 Channel Watched

100 channels per month will be Watched per month

So Charges = 100 x 1 = 100  Rs for Hathway

Tatasky charges  Rs. 120 per month  

Hence Hathway is better option

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