Figure 16-4
-Refer to Figure 16-4.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price.What is the per-unit price?
A) $28
B) $24
C) $12
D) $8

Question

Figure 16-4 
-Refer to Figure 16-4.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price.What is the per-unit price?
A) $28 
B) $24 
C) $12 
D) $8

Quizplus · Accepted Answer

The monopoly price (where MR=MC) is $32, as shown in the diagram. If the firm decides to charge a two-part pricing strategy, it will charge a fixed fee plus a per-unit price equal to the monopoly price. The fixed fee can be any amount as long as it does not drive away all consumers, so let's assume it's $16. To find the per-unit price, we subtract the fixed fee from the monopoly price: $32 - $16 = $16. Therefore, the per-unit price is $16, which is equivalent to option B.

Figure 16-4 -Refer to Figure 16-4.Suppose the Firm Represented in the Diagram