The Average Consumer at a Firm with Market Power Has

question 90

Multiple Choice

The average consumer at a firm with market power has an inverse demand function of P = 10 − Q.The firm's cost function is C = 2Q.If the firm engages in two-part pricing,what is the optimal fixed fee to charge each consumer?

• A) $2
• B) $32
• C) $64
• D) None of the answers are correct.

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Definitions:

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The total expenditures for wages, benefits, and payroll taxes that employers incur in compensation for the work performed by their employees.