A community's demand for monthly subscription to a streaming music service is shown by the following table. Assume that there are only two firms serving this market (Firm A and Firm B), each firm offers the same quality of service and music selection, and that each firm’s marginal cost is constant and equal to 0 (zero). (please refer to table provided) If this market were highly competitive instead of a duopoly, the quantity of streaming movie subscriptions purchased each month would be ______If the two firms agreed to each supply one half of the quantity a monopoly would supply, the contract would specify that each firm would supply ____ **Price-Month Analysis Table**This table represents the relationship between the monthly price (P), the number of customers (Q), and the total revenue per month (TR) for a given service or product. It is a valuable tool for understanding how different pricing strategies can impact customer acquisition and overall revenue.**Table Breakdown:**Price/Month (P) | Number of Customers (Q) | Total Revenue/Month (TR)-----------------|-------------------------|-------------------------$10 | 0 | $0$9 | 150 | $1350$8 | 300 | $2400$7 | 450 | $3150$6 | 600 | $3600$5 | 750 | $3750$4 | 900 | $3600$3 | 1050 | $3150$2 | 1200 | $2400$1 | 1350 | $1350$0 | 1500 | $0**Explanation:**- **Price/Month (P)**: This column lists the price of the product or service per month, ranging from $10 to $0. - **Number of Customers (Q)**: This column indicates the number of customers willing to pay the corresponding price in the first column.- **Total Revenue/Month (TR)**: This column represents the total revenue generated from the number of customers at the given price point. It is calculated by multiplying the price (P) by the number of customers (Q).**Key Observations:**1. When the price is at the highest ($10), there are no customers, resulting in zero revenue.2. As the price decreases from $10 to $5, the number of customers increases, leading to increased total revenue.3. The maximum total revenue of $3750 is achieved at a price point of $5 with 750 customers.4. After the peak at $5, even though the number of customers continues to increase with further price decreases, the total revenue starts to decrease again.5. At the lowest price ($0), there are 1500 customers, but the total revenue returns to zero because the service or product is provided for free.This table provides critical insights for companies to determine the optimal pricing strategy that maximizes revenue while considering the behavior of their

The total revenue earned by a firm in the market is the total payments received from the sale of…

Answered: A community's demand for monthly…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A community's demand for monthly subscription to a streaming music service is shown by the following table. Assume that there are only two firms serving this market (Firm A and Firm B), each firm offers the same quality of service and music selection, and that each firm’s marginal cost is constant and equal to 0 (zero).

(please refer to table provided)

If this market were highly competitive instead of a duopoly, the quantity of streaming movie subscriptions purchased each month would be ______
If the two firms agreed to each supply one half of the quantity a monopoly would supply, the contract would specify that each firm would supply ____

**Price-Month Analysis Table**

This table represents the relationship between the monthly price (P), the number of customers (Q), and the total revenue per month (TR) for a given service or product. It is a valuable tool for understanding how different pricing strategies can impact customer acquisition and overall revenue.

**Table Breakdown:**

Price/Month (P) | Number of Customers (Q) | Total Revenue/Month (TR)
-----------------|-------------------------|-------------------------
$10 | 0 | $0
$9 | 150 | $1350
$8 | 300 | $2400
$7 | 450 | $3150
$6 | 600 | $3600
$5 | 750 | $3750
$4 | 900 | $3600
$3 | 1050 | $3150
$2 | 1200 | $2400
$1 | 1350 | $1350
$0 | 1500 | $0

**Explanation:**

- **Price/Month (P)**: This column lists the price of the product or service per month, ranging from $10 to $0.

- **Number of Customers (Q)**: This column indicates the number of customers willing to pay the corresponding price in the first column.

- **Total Revenue/Month (TR)**: This column represents the total revenue generated from the number of customers at the given price point. It is calculated by multiplying the price (P) by the number of customers (Q).

**Key Observations:**

1. When the price is at the highest ($10), there are no customers, resulting in zero revenue.
2. As the price decreases from $10 to $5, the number of customers increases, leading to increased total revenue.
3. The maximum total revenue of $3750 is achieved at a price point of $5 with 750 customers.
4. After the peak at $5, even though the number of customers continues to increase with further price decreases, the total revenue starts to decrease again.
5. At the lowest price ($0), there are 1500 customers, but the total revenue returns to zero because the service or product is provided for free.

This table provides critical insights for companies to determine the optimal pricing strategy that maximizes revenue while considering the behavior of their

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