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

question 63

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.If the firm will charge a monthly access fee plus a per hour rate,the monthly access fee will equal

• A) $1.
• B) $5.
• C) $8.
• D) $16.

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Definitions:

Interest

The charge for borrowing money, typically expressed as an annual percentage rate, or the income earned from investing funds.

Sunk Cost

A sunk cost refers to money already spent and permanently lost, which cannot be recovered and should not impact future business decisions.

Externality

A cost or benefit that affects a party who did not choose to incur that cost or benefit, often seen in environmental and public goods scenarios.

After-tax Proceeds

The net amount received after taxes are deducted from the gross proceeds of a sale or transaction.