In Questions a Firm Sells Its Product to Two

question 41

Multiple Choice

In Questions 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.
-Assuming both daytime and nighttime markets are served, the optimal per unit usage fee (f*) is

• A) f * = $24
• B) f * = $34
• C) f * = $44
• D) f * = $54
• E) f * = $64

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Definitions:

Empathy

The ability to understand and share the feelings of another.

Psychosocial Development

The development of the personality and the acquisition of social attitudes and skills from infancy through maturity.

Erikson

A psychosocial development theorist known for his 8-stage theory of human development.

Initiative Versus Guilt

Erikson’s third psychosocial stage in which young children develop a sense of purposefulness, try new skills and activities, and take pride in their accomplishments, as well as feel guilt if they are unsuccessful.