A Firm Sells Its Product to Two Groups of Buyers

question 52

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. Should the firm bother to sell output to the nighttime market?

• A)Yes,because only $77,200 of profit is earned by serving only the daytime buyers.
• B)Yes,because only $137,200 of profit is earned by serving only the daytime buyers.
• C)No,because $240,000 of profit is earned by serving only the daytime buyers.
• D)No,because $300,000 of profit is earned by serving only the daytime buyers.

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Definitions:

Mechanistic Metaphysics

A philosophical viewpoint that regards natural processes as mechanically determined and capable of explanation by laws of physics and chemistry.

Non-teleological

Pertaining to theories or viewpoints that reject the existence of ultimate purposes or ends in natural phenomena or human activities.

Substance Interaction

The notion in philosophy that distinct substances (such as mind and body) have causal relations or can affect each other.

Descartes

A French philosopher, mathematician, and scientist, often referred to as the father of modern philosophy, known for his statement, "I think, therefore I am."