Dollar Books provides services to customers that want to transform their books i

Question

Dollar Books provides services to customers that want to transform their books into pdf files. The customer needs to pay a fee of 5 dollars a month to access the service, and a usage charge of 6 cents of dollar per page.

Jane has too many books at home and wants use Dollar Books services to make a pdf version of her library. Her monthly demand curve is Q = 1000 – 100P, where Q is the number of pages and P is the price expressed in cents. What is the total revenue for Dollar Books for this customer? What is Jane’s Consumer Surplus? Explain and show calculations.

Explanation / Answer

Monthly demand curve , Q = 1000 - 100P

we have the price of per page , which is equal to 6 cents.

therefore, Q = 1000 - 100* P

Q = 1000 - 600 = 400

SO, dollar book's Total revenue= P *Q .

TR = 400 * 6 = $2400 cents.

Jane's Consumer surplus = 1/2 * (10-6) * 400

Janes CS = 1/2 * 4 * 400 = $800 cents.

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