A Firm Sells Its Product to Two Groups of Buyers

question 4

Multiple Choice

A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers.There are 50 daytime buyers,all of whom have identical demands given by D_D in the figure below.There are 50 nighttime buyers,all of whom have identical demands given by D_N in the figure below.The firm's variable costs are constant (SMC = AVC = $12) and its total fixed cost is $250,000.The marketing director must devise a two-part pricing plan that will maximize the firm's profit. If a firm is selling a product in two markets,A and B,and the marginal revenue in A is $25 and the marginal revenue in B is $20,the firm should

• A)charge a higher price in A where MR is higher
• B)charge a lower price in B where MR is lower
• C)sell more in B and less in A
• D)sell more in A and less in B
• E)both a and c

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