1. Sam Smith owns an internet radio company that has subscribers in Houston and Dallas. The demand functions for the 2 markets are:
Q(Houston) = 50-0.35P(Dallas)
Q(Dallas) = 80-0.40P(Houston) Quantities are in thousands of subscriptions per year.
The cost of providing internet radio service is TC = 800+50Qt
a. What price should Sam charge and how many subscribers will he have if he treats Houston and Dallas as one market?
b. What is the total quantity of subscribers for one market?
c. What is the quantity in the Houston market?
d. What is the quantity in the Dallas market?
e. What prices should Sam charge and what are the associated quantities if he wants to maximize profits?