Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.25 per minute, how large of a fixed monthly fee can it charge and still persuade customers to buy their service?
A. $200
B. $153.13
C. $306.25
D. $175
B. $153.13
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Carefully define the following terms, and explain their importance in economics. a. Opportunity cost b. Abstraction c. Theory d. Model e. Marginal analysis
What will be an ideal response?
An increase in market supply will increase price
Indicate whether the statement is true or false
Economics alone cannot determine the best way to balance the goals of efficiency and equity
a. True b. False Indicate whether the statement is true or false
You are in the market for a used 2013 Honda Accord. You know that half of the 2013 Accords are lemons and half are peaches. If you could be assured that the Accord you were buying was a peach, you would be willing to pay up to $10,000. On the other hand, you would only be willing to pay $2,000 for a lemon. You have no ability to discern whether any particular Accord is a lemon or a peach. Sellers of Accords, on the other hand, are likely to know whether their particular car is a lemon or a peach. Suppose sellers of lemons will sell their cars for $1,500 or more and peach sellers will be willing to sell their cars for $8,500 or more. Over time the price in the market for 2013 Accords will ________ and ________ will be traded.
A. be between $1,500 and $2,000 for lemons; only lemons B. be between $8,500 and $10,000; only peaches C. be between $1,500 and $10,000; both lemons and peaches D. be between $8,500 and $10,000 for peaches and between $1,500 and $2,000 for lemons; both lemons and peaches