optimal amount of capacity and corresponding prices

Suppose that it is possible to provide internet backbone capacity at a constant marginal capital investment of $5 per megabit per second (mb/s). There are no marginal costs. There are two time periods during the day (for simplicity each will be 12 hours): day and night. During the peak period (daytime) of 250 business days per year, the demand for capacity during daytime for one day is given by
Peak Demand: P = a- bQ
Where P is the price for capacity during the period. During the off-peak period of those 250 days, demand is one-half that of the peak period for each possible price,
Off peak Demand: P = a- 2bQ
On other days, demand is zero. Assume that the interest rate is 10 percent and the facilities do not depreciate.

a. If a = $16, b = 0.08 and existing capacity is 120 mb/s, what would be the socially optimal prices during the two periods? (assume no capacity expansion)

b. What is the optimal amount of capacity and what are the corresponding prices? (assume can expand capacity)

c. The above is called a firm peak case with peak demanders paying all capital costs. Now suppose that the capital cost is $10 and there is no pre-existing capacity. If peak demanders pay all capital costs, what quantity is demanded by peak demanders? If off-peak price is zero, what is off-peak quantity? (fractions are okay). This is the shifting peak case.

d. For the demand curves in c., find the optimal amount of capacity and corresponding prices.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with AssignmentHelpWeb
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Psychology
Thanks a lot the paper was excellent
Customer 452453, October 26th, 2022
Business Studies
Excellent service - thank you!
Customer 452469, February 20th, 2023
Business Studies
Thank you!
Customer 452451, November 27th, 2022
Anthropology
Excellent services will definitely come back
Customer 452441, September 23rd, 2022
Nursing
The paper was EXCELLENT. Thank you
Customer 452449, September 23rd, 2022
Theology
Job well done and completed in a timely fashioned!
Customer 452451, November 18th, 2022
Public Administration
Excellent timely work
Customer 452451, April 19th, 2023
Anthropology
excellent loved the services
Customer 452443, September 23rd, 2022
Architecture, Building and Planning
The assignment was well written and the paper was delivered on time. I really enjoyed your services.
Customer 452441, September 23rd, 2022
English 101
Very good job. I actually got an A
Customer 452443, September 25th, 2022
Business Studies
Job well done. Finish paper faster than expected. Thank you!
Customer 452451, October 3rd, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat