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Economics - Consumer Surplus

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Suppose that telephone co. has hired you as a consultant to determine what price it should set for calling services. Suppose that an individuals' inverse demand for wireless services in the greater Atlanta area is estimated to be P = 100 - 33Q and the marginal cost of providing wireless services to the area is $1 per minute. Compute consumer surplus when the telephone co. charges an optimal two-part price.
A. $0
B. $74.25
C. $148.50
D. There is insufficient information to compute consumer surplus

Please show step/calculations.

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Solution Summary

The expert examines the consumer surplus in economics.Neat, step-wise solution is provided.

Solution Preview

Consumer Surplus is defined as the area under the demand curve but above the price line.

In other words, consumer surplus = ...

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