A firm faces two groups of consumers with different demand equations as follows: Strong demander: Ps = 12 - Qs. Weak demander: Pw = 8- Qw-. For simplicity, there is one strong demander and there is one weak demander. The marginal cost is $2 and there is no total fixed cost. The firm considers using two-part pricing strategy by assuming that the price per unit of a product (P) is greater than its marginal cost and both strong and weak demanders are in the market. What will the entry fee (A*) and the price of a product (P*) be? O A* = $8; P* = $3. OA* = $8; P* = $4 OA* = $16; P* = $3. A* = $16; P* = $4. f the aboye

A firm faces two groups of consumers with different demand equations as follows: Strong demander: Ps = 12 - Qs. Weak demander: Pw = 8- Qw-. For simplicity, there is one strong demander and there is one weak demander. The marginal cost is $2 and there is no total fixed cost. The firm considers using two-part pricing strategy by assuming that the price per unit of a product (P) is greater than its marginal cost and both strong and weak demanders are in the market. What will the entry fee (A) and the price of a product (P) be? O A* = $8; P* = $3. OA* = $8; P* = $4 OA* = $16; P* = $3. A* = $16; P* = $4. f the aboye

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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