Which of the Following Statements About Setting Optimal Two-Part Tariffs

question 19

Multiple Choice

Which of the following statements about setting optimal two-part tariffs for many consumers is NOT true?

• A) The number of buyers (entrants) declines as the entrance fee (tariff) increases.
• B) The profit from the entrance fee (tariff) is a concave function of the tariff because it first increases and then decreases as the tariff increases.
• C) The profit from the entrance fee (tariff) is a convex function of the tariff because if first declines and then increases as the tariff increases.
• D) The total profits is composed of the profit from the entrance fee (tariff) and from the profit from sales to buyers.