What would the largest cardholder fee that tuan will pay., Ask an Expert

Economics

Tuan lives in a town with only one movie rental store. Suppose Tuan's demand for movie rentals per month is Q = 16- 2P . The movie store currently charges $5 per movie, but is thinking of adding a flat monthly cardholder fee, and dropping the price to $2 per rental. At this new price, what is the largest cardholder fee that Tuan will pay? If the rental store has a constant marginal cost of $2, which strategy is more profitable?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9272901

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