Eleven Consumers Are Trying to Decide Whether to Connect to a New

question 6

Multiple Choice

Eleven consumers are trying to decide whether to connect to a new communications network.Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on.Where k is the number of consumers connected to the network (including oneself) , a consumer of type n has a willingness to pay to belong to this network equal to k times n.What is the highest price at which 11 consumers could all connect to the network and either make a profit or at least break even?

• A)$12
• B)$10
• C)$1
• D)$0
• E)$11

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Definitions:

Shares

Holdings in a corporation or financial asset, these units confer rights to an equitable distribution of dividends from declared profits.

Quarterly Dividend

A dividend paid by a company to its shareholders every quarter, representing a portion of the company's earnings.

Capital Gains

The profit earned from the sale of an asset or investment which has increased in value over the holding period.

Shares

Units of ownership in a company or financial asset that represent a portion of the total capital.