To join the Quiet Reading Society, members pay a fixed annual fee of F, and then they can read any number of books at an extra charge P per book. Each member’s willingness to pay for Q books is P = 100 - 5Q. (Here, Q refers to the number of books a member reads completely, but partial quantities are also possible.) The club has fixed costs, but incurs no additional cost when a member checks out a book to read. What does the optimal two-part pricing scheme look like? A. It costs nothing to join the club, and then books can be read for $50 each. B. It costs $100 to join the club, and then books can be read for $5 each. C. It costs $500 to join the club, and then books can be read for $10 each. D. It costs $1,000 to join the club, and then books can be read for free.

To join the Quiet Reading Society, members pay a fixed annual fee of F, and then they can read any number of books at an extra charge P per book. Each member’s willingness to pay for Q books is P = 100 - 5Q. (Here, Q refers to the number of books a member reads completely, but partial quantities are also possible.) The club has fixed costs, but incurs no additional cost when a member checks out a book to read. What does the optimal two-part pricing scheme look like? A. It costs nothing to join the club, and then books can be read for $50 each. B. It costs $100 to join the club, and then books can be read for $5 each. C. It costs $500 to join the club, and then books can be read for $10 each. D. It costs $1,000 to join the club, and then books can be read for free.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter1: Introduction: What This Book Is About

Section: Chapter Questions

Problem 4MC

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