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QUESTION 4 20 points Save Answer A firm's total cost of producing ( units of output is C(Q)-500+ 200. There are ten potential consumers of
QUESTION 4 20 points Save Answer A firm's total cost of producing ( units of output is C(Q)-500+ 200. There are ten potential consumers of the firm's product: six "rich" consumers, euch with inverse demandP(Q)-100-5Q; and four "poor" consumers, each with inverse demand P(Q) -100-800. a. What is the largest fixed fee ( F,.) that a poor consumer would pay for the right to purchase the product at a per-unit price equal to marginal cost? What is the corresponding largest fixed fee (FA) that a rich consumer would pay? b. Suppose a two-part tariff is implemented. The per-unit price is set equal to the finn's marginal cost, and the fixed fee is set equal to F... How much profit would the firm earn if it operated under this tariff? Hint for part a: the largest fixed fee a consumer would pay is equal to their consumer surplus
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