Always There Wireless Is Wireless Monopolist in a Rural Area

question 33

Multiple Choice

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.25 per minute,how large of a fixed monthly fee can it charge and still persuade customers to buy their service?

• A) $200
• B) $153.13
• C) $306.25
• D) $175

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Definitions:

Unrealized Intercompany Profits

Profits that result from transactions between parent and subsidiary companies that have not yet been realized through sales to external parties.

Equity Method

An accounting technique used by companies to record their investments in other companies, adjusting the investment for the investor's share of the investee's profits or losses.

Consolidated Inventory

The total value of all inventories held by a parent company and its subsidiaries, accounted for in a consolidated financial statement.

Unrealized Inventory Profits

Profits that are reported on paper through an increase in inventory value but have not yet been realized through sales.