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Suppose a firm sells its products to identical customers and each of them has the following demand for its product: P=40-Q. Further assume that the marginal cost to produce the product is $5. The fim is thinking of implementing the two part pricing technique: charge consumers an "entrance" fee and then charge $5 per each unit the consumers consume.
Under this scenario,
A. What would be the entrance fee for each consumer?
B. What would be the producer surplus per each customer?
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