Question

Question 22 3.3 points Save Answer Price discrimination is charging consumers different prices for the same good based on individual characteristics of consumers, membership in an identifiable subgroup of consumers, or on the quantity purchased by the consumers. Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5-(M2)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 results in the firm selling 4.5 hours. 8 hours 5 hours 10 hours

Answer 1

Answer: Option B: 8 hours

given p=5-1/2q

MC= $1

For two part tariff

MC=p=1

5-/2q=1

so we get q=8 hours