If Marginal Cost Is Zero, with an Optimal Two-Part Tariff

question 144

Multiple Choice

If marginal cost is zero, with an optimal two-part tariff

• A)total revenue is maximized.
• B)consumers maximize their surplus
• C)the firm does not have to charge a fixed-fee portion.
• D)firms may not maximize profit.

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Definitions:

Central Route

A method of persuasion that involves carefully constructing and presenting a logical argument.

Elaboration Likelihood

A theory suggesting the degree to which people are likely to pay attention to and elaborate on persuasive messages, influenced by their motivation and ability to process the message.

Motivation

The force that moves people to behave, think, and feel the way they do.

Self-perception Theory

A psychological theory suggesting that people develop their attitudes and opinions by observing their own behavior and concluding what attitudes must have caused it.