Consumer surplus via an optimal two-part pricing strategy

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A local video store estimates its average customer’s demand per year is Q = 7 − 2P, and it knows the marginal cost of each rental is $0.5. How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal two-part pricing strategy?

(A) $9, (B) $10, (C) $11, (D) $1

Reference no: EM13998785

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