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

Question 2

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 4 consumers could all connect to the network and either make a profit or at least break even?


A) $24
B) $40
C) $64
D) $28
E) $32

Correct Answer:

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