A Local Video Store Estimates Its Average Customer's Demand Per

question 76

Multiple Choice

A local video store estimates its average customer's demand per year is Q = 20 − 4P,and it knows the marginal cost of each rental is $1.00.How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal two-part pricing strategy?

• A) $20
• B) $32
• C) $40
• D) $64