00:01
Hello students we are going to write here customer demand per year is given cost of each rental is given how much should a store charge for an annual membership in order to extract the entire consumer surplus via an optimal two -part pricing strategy so basically if i write here for this this must be written as if i write here for this so where so we are going to calculate if i write here for this this must be written as we are going to calculate demand demand at price so we need to use the formula price is equal to marginal cost where price is we are going to write here dollar point five so here this must be written as q value is equal to 7 minus 2p, which is we are going to write here for this.
01:06
This is 7 minus 2 multiplied by 0 .5, which is 7 minus 1, that is equivalent to 6.
01:15
So basically if i write here for this, calculate price at which demand be 0.
01:21
So if i write here for this, calculate the price where we are going to write here where demand is equal to 0.
01:35
So this must be 7 minus 2 p is equal to 0, 2 is equal to 7.
01:42
So p value is 3 .5.
01:44
So this must be dollars 3 .5.
01:48
If i write here for this, this must be written as.
01:54
So now we are going to calculate our consumer surplus.
01:59
This must be written as consumer surplus is half of...