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Would the owner want to set a two-part tariff

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Reference no: EM131100667

The owner of a video store thinks that the demand is given by Q=5-p. He also thinks that MC=0.

A. Verify that the marginal revenue is MR=5-2Q? Given this what rental rate would be set for his videos?

B. Would the owner want to set a two-part tariff? If so, what would this be? Explain fully.

Reference no: EM131100667

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