In Questions a Firm Sells Its Product to Two

question 6

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.
-How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers) ?

• A) $80,600
• B) $90,600
• C) $124,600
• D) $185,600
• E) $215,600

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Definitions:

Retirement Savings

Retirement savings are funds that individuals set aside during their working years to support themselves financially during retirement, often utilizing accounts like 401(k)s or IRAs.

Compounded Monthly

This refers to the technique of computing interest monthly by taking into account not just the initial amount invested but also the interest that has been accrued in earlier periods.

IRA

Individual Retirement Account, a tax-advantaged investing tool that individuals use to earmark funds for retirement savings.

After taxes

Refers to the net income after all tax expenses have been deducted.