A Firm Sells Its Product to Two Groups of Buyers

question 29

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. Suppose the marketing director ignores the nighttime market and wishes to extract all consumer surplus from the daytime buyers.The optimal access charge is $_________ and the optimal usage fee is $______ per unit.

• A)A* = $1,000 and f * = $12
• B)A* = $2,400 and f * = $12
• C)A* = $7,744 and f * = $12
• D)A* = $9,856 and f * = $12

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Definitions:

ATP

Adenosine triphosphate, a molecule that carries energy within cells for metabolism, acting as a primary energy currency in the cell.

ADP

ADP, or Adenosine Diphosphate, is a molecule involved in cellular metabolism. It is converted to ATP for energy storage by the addition of a phosphate group.

Molecule

Two or more atoms joined by chemical bonds.

PGA

An acronym that can refer to several concepts; in a biological context, it often stands for phosphoglyceric acid, a 3-carbon molecule formed in the Calvin cycle of photosynthesis.