Suppose All Individuals Are Identical, and Their Monthly Demand for Internet

question 72

Multiple Choice

Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2) q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. The profit maximizing two-part tariff results in the firm selling

• A)4.5 hours.
• B)10 hours.
• C)5 hours.
• D)8 hours.

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Definitions:

Benefit Basis

The underlying advantages or favorable aspects upon which decisions or actions are based.

Occasion

A specific time or event for which a particular activity is suited or at which it takes place.

Loyalty

The quality of being faithful in one's support of a particular brand, product, or service, often resulting in repeat purchases or continued engagement.

Salient Attributes

Key features or characteristics of a product or service that are most important to the consumer and influence their purchasing decision.