Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.The profit-maximizing two-part tariff yields total revenue of
A)$24.
B)$40.
C)$16.
D)$32.

Question

Quizplus · Accepted Answer

The profit-maximizing two-part tariff yields total revenue of $24. This is because the firm can charge a fixed fee of $12 and a per-unit fee of $2, which will yield a total revenue of $24.

Suppose All Individuals Are Identical,and Their Monthly Demand for Internet