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:

System Pressure

Usually refers to the range of pneumatic circuit pressures between cut-out and cut-in pressure values in an FMVSS 121–compliant air brake system. Can refer to other fluid power circuit pressures such as those in transmission hydraulics and engine lube circuits.

Tractor/Trailer Combination

A configuration consisting of a tractor unit that provides the motive power and a trailer unit that carries the cargo, commonly used for freight transport.

Air Loss Rate

The speed at which air escapes from a pressurized system, often measured to assess the integrity of tires, pipes, or containers.