Figure 16-5

-Refer to Figure 16-5.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.)What is the quantity it should produce?
A)240 units
B)320 units
C)480 units
D)560 units

Question

Figure 16-5
 
-Refer to Figure 16-5.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.)What is the quantity it should produce?
A)240 units 
B)320 units 
C)480 units 
D)560 units

Quizplus · Accepted Answer

In a two-part pricing strategy with a per-unit price equal to the competitive price, the firm should produce where price equals marginal cost. This typically occurs at the competitive equilibrium quantity, which is 480 units in this scenario.

Figure 16-5 -Refer to Figure 16-5.Suppose the Firm Represented in the Diagram