Figure 16-4 -Refer to Figure 16-4.Suppose the Firm Represented in the Diagram

question 6

Multiple Choice

Figure 16-4
-Refer to Figure 16-4.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.) What is the total revenue it can expect to collect from the fixed fee portion of the price?

• A) $2,560
• B) $5,760
• C) $7,870
• D) $10,240

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Definitions:

Multi-Attribute Utility Theory

An approach in decision-making that evaluates alternatives based on multiple criteria to assess their overall utility.

Systematically Search

A methodical and organized approach to search for information or solutions, often following a specific plan or pattern.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, often referred to as the "I-knew-it-all-along" phenomenon.

Availability

The ease with which a particular piece of information can be recalled from memory, often influenced by recent exposure or emotional impact.