Question: A local video store estimates its average customer's demand per year is Q = 20 4P, and it knows the marginal cost of each rental

A local video store estimates its average customer's demand per year is

Q = 20 4P, and it knows the marginal cost of each rental is $1.00. 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?

Multiple choice:

a) $20

b) $32

c) $40

d) $64

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