In Questions a Firm Sells Its Product to Two

question 1

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.
-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:

Overstatement

The action of stating or estimating a quantity or value more highly than is justified by the available evidence.

Inventory Turnover

A measure of how many times a company's inventory is sold and replaced over a specific period.

Cost of Goods Sold

The direct costs attributable to the production of goods sold in a company, including materials and labor.

Average Inventory

A measure used to estimate the value of inventory over a certain period by averaging the beginning and ending inventory.