Question
1.A muffin stand lets consumers choose among a menu of three pricing options: (a) a monthly subscription fee of $20 and a price per muffin
1.A muffin stand lets consumers choose among a menu of three pricing options:
(a) a monthly subscription fee of $20 and a price per muffin of $4;
(b) a monthly subscription fee of $30 and a price per muffin of $3; or
(c) a monthly subscription fee of $90 and allows for unlimited amounts of muffins at no additional cost.
Suppose that muffins are incredibly addictive, so consumers have perfectly inelastic demand for them, up to a certain saturation point. In what range of muffins per month would that saturation point need to be for a consumer to select pricing option b?
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