Using Supply and Demand to Analyze Markets — End of Chapter Problem

Using Supply and Demand to Analyze Markets — End of Chapter Problem

Consider the demand for broadband internet service, given as ??=224−4?. Q is the number of subscribers in a given area (in hundreds), and P is the price in dollars per month. This demand relationship is illustrated in the diagram below. Assume the price of broadband service is $25 per month.

a. What will the total number of subscribers be at a price of $25? ______ subscribers

b. What is the total amount paid by broadband subscribers for the service (i.e., Area B)? _____ dollars per month

c. What is the consumer surplus received by the subscribers (i.e., Area A)? ______ dollars per month

d. What is the total value to subscribers of broadband service (i.e., Areas A and B)? ______ dollars per month