An internet service provider in a town has 500 subscribers and charging Rs. 300 per month from each subscriber. He proposes to increase the monthly charges and it is believed from past experience that for every increase of Rs. 1, one subscriber will discontinue the service.
Total monthly revenue ‘R’ is given by:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (300 + x) (500 − x)
Let the monthly charge be increased by Rs. x.
\(\text{charge per subscriber} = 300 + x\)
Each increase of Rs. 1 loses one subscriber, so an increase of Rs. x loses x subscribers:
\(\text{number of subscribers} = 500 - x\)
Revenue = charge × number of subscribers:
\(R = (300 + x)(500 - x)\)