Digicom is a wireless services company with a monthly demand for cell phone minutes for each...

Digicom is a wireless services company with a monthly demand for cell phone minutes for each client that can be expressed as follows: P = $2 – 0.02Q Where P is the price paid by the client per minute and Q is the number of minutes bought by the client each month. The marginal cost is $0.20 per minute. Assume now that Digicom offers a two-part tariff with a monthly fixed fee and a per minute charge. What is the optimal two-part tariff? What is the profit per client? How many minutes are used per month for each client?

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Rahul Sunny answered 1 year ago

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