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

question 36

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 yields total revenue of

• A)$24.
• B)$40.
• C)$16.
• D)$32.

Learn how to calculate consumer and producer surplus in a market equilibrium.

Understand the impact of government interventions such as price ceilings on market equilibrium, consumer surplus, and producer surplus.

Comprehend the effects of price ceilings and minimum wage laws on different market participants.

Analyze the consequences of changes in market supply and demand elasticity on surplus.

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Definitions:

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a 360-day year.

Ordinary Simple Interest

A method for calculating the interest charge on a loan or investment based on the original principal, rate, and length of time, without compounding.

360-Day Year

A financial calculation assumption where the year is considered to have 360 days for simplifying interest related calculations.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment based on a simple interest rate, without the compounding factor.