Consider Three Pricing Strategies That the Firm Can Pursue

question 10

Multiple Choice

Consider three pricing strategies that the firm can pursue:
a. optimal two-part tariff pricing
b. perfect price discrimination
c. single-price monopoly pricing
Of these three strategies, which is most beneficial to society as a whole?

• A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit.
• B) only perfect price discrimination because this pricing method eliminates deadweight loss
• C) single-price monopoly pricing because consumers enjoy at least some consumer surplus
• D) only two-part tariff pricing because the per-unit portion of the price is set equal to marginal cost

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Definitions:

Pervasive Social Issue

a widespread and deeply ingrained problem within society that affects a significant portion of the population and requires collective action for resolution.

Functionalism

A social theory that views society as a complex system of interrelated parts that work together to maintain stability and social order.

Cooperative Groups

Entities formed by individuals or organizations who voluntarily collaborate to achieve common goals or undertake specific tasks together, often sharing resources and responsibilities.

Capitalist Societies

Societies organized around the principles of capitalism, where the means of production are privately owned and operated for profit.