Suppose that Verizon Wireless has hired you as a consultant to determine what price it should set for calling services. Suppose that an individual's inverse demand for wireless services in the greater Boston area is estimated to be P = 100 ? 33Q and the marginal cost of providing wireless services to the area is $1 per minute. What is the optimal two-part price that you would suggest to Verizon?
A. Charge a fixed fee = $3 and a usage fee of $0.33 per minute.
B. Charge a fixed fee = $3 and a usage fee of $3 per minute.
C. Charge a fixed fee = $148.50 and a usage fee of $1 per minute.
D. Charge a fixed fee = $95.5 and a usage fee of $1 per minute.
Answer: C
Economics
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