A Pricing Strategy That Requires Consumers Pay an Up-Front Fee

question 79

Multiple Choice

A pricing strategy that requires consumers pay an up-front fee plus an additional fee for each unit of product purchased is a:

• A) tying contract.
• B) two-part tariff.
• C) form of perfect price discrimination.
• D) none of these.

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Definitions:

Marginal Product Labor

The additional output produced as a result of employing one more unit of labor, holding other inputs constant.

Marginal Product Capital

This refers to the additional output produced as a result of using one more unit of capital, holding other inputs constant.

Maximum Profit Equilibrium

The point at which a firm achieves its highest level of profit given its production and cost constraints.

Price Labor

The cost associated with hiring workers or the wage that employers pay to their employees for their labor.