Southeast Telephone Company Uses Two-Part Pricing for Its Long-Distance Call

question 101

Multiple Choice

Southeast Telephone Company uses two-part pricing for its long-distance call charges.Because this is a service,the price is broken into a fixed fee plus a(n) ________.

• A) fixed usage rate
• B) variable usage rate
• C) standard usage rate
• D) market usage rate
• E) optional usage rate

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production volume increases.

Marginal Social Cost

The total cost to society of producing one additional unit of a good or service, including both direct costs and any adverse impacts on third parties.

External Costs

Costs that affect parties who do not directly participate in an economic transaction, often not reflected in market prices (e.g., pollution).

Tax

A required financial imposition or alternative type of assessment placed on taxpayers by government entities to support government budgeting and assorted public outlays.