A Firm Has Two Customers and Creates a Two-Part Tariff

question 26

Multiple Choice

A firm has two customers and creates a two-part tariff with a usage fee (P) that exceeds the marginal cost of production and leaves each customer with positive consumer surplus such that CS2 > CS1 > 0.If the firm sets the entry fee equal to CS2,then the number of customers that actually buy the product is equal to:

• A)zero.
• B)one.
• C)two.
• D)We don't have enough information to answer this question.

Recognize the relationship between the quantity of inputs and production efficiency.

Understand the significance of the shape of long-run average cost curves.

Apply knowledge of costs to assess optimal input purchase decisions.

Understand the concept of self-fulfilling prophecy within the context of psychological disorders.

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Definitions:

Revenue Account(s)

Accounts that track the income generated from the sale of goods or provision of services before any expenses are deducted.

J. Higgins, Withdrawals

The amount of money withdrawn by J. Higgins from a business for personal use, affecting the owner's equity.

M. Sims Capital

An account representing the owner’s equity or the funds contributed by and belonging to the owner of a company.