Figure 16-4
-Refer to Figure 16-4.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 monopoly price.What is the revenue collected from the fixed fee portion of the price?
A) $10,240
B) $7,870
C) $2,560
D) $1,440

Question

Figure 16-4 
-Refer to Figure 16-4.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 monopoly price.What is the revenue collected from the fixed fee portion of the price?
A) $10,240 
B) $7,870 
C) $2,560 
D) $1,440

Quizplus · Accepted Answer

The fixed fee portion of the price is equal to the total fixed cost of the firm, which is $2,560. This is because in a two-part pricing strategy, the fixed fee should be set equal to the value that the consumer places on consuming the good, without regard to the per-unit price. The revenue collected from the per-unit price will depend on the level of output produced and sold, but the fixed fee portion is independent of output.

Figure 16-4 -Refer to Figure 16-4.Suppose the Firm Represented in the Diagram