Answer:
A) If Mega Media sets the price at $25, 23,000 sports viewers will subscribe to their sports channel. Their profit will = (23,000 x $25) - $100,000 = $575,000 - $100,000 = $475,000
B) If Mega Media sets the price at $150, only 3,000 sports viewers will subscribe to their sports channel. Their profit will = (3,000 x $150) - $100,000 = $450,000 - $100,000 = $350,000
C) Since Mega Media is not able to price discriminate, then it should charge only $25 a year for the subscribing to the sports channel since at that price their profit will be $475,000.
D) If Mega Media could price discriminate, its profit = (20,000 x $25) + (3,000 x $150) - $100,000 = $500,000 + $450,000 - $100,000 = $850,000
