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Suppose a firm sells its products to identical consumers and each of them has the following demand for its product: P=40-Q. Further assume that the marginal cost to produce the product is $5. The firm is thinking of implementing the two part pricing technique: charge consumers an "entrance" fee and then charge $5 per each unit the consumers consume. Under this scenario, what should be the "entrance" fee for each consumer? what would be the producer surplus per each customer?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M939125

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