Question

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.
(i) How many channels per month will you watch with each network?
(ii) Based on consumer surplus obtained, which provider should you choose?

Answer 1

Answer

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

Answer 2

Answer:

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