Which of the Following Statements About Two-Part Tariffs Is False

question 205

Multiple Choice

Which of the following statements about two-part tariffs is false?

• A)Because each individual has a different individual demand curve, if there is just one entrance fee some consumers will be able to reap some consumer surplus.
• B)The producer cannot capture the entire consumer surplus because the entrance fee might discourage some potential consumers even though they would have been willing to pay a lesser entrance fee.
• C)A two-part tariff allows a producer to capture the entire consumer surplus.
• D)For a two-part tariff to be successful, the producer must be able to identify two distinct customer groups.

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Definitions:

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.

Return on Equity

A measure of the profitability of a business in relation to the equity, indicating how effectively equity is used to generate profits.

Total Stockholders' Equity

The total amount of funds contributed by investors and the accumulated earnings of a company, less any dividends paid.

Net Operating Income

A financial metric that calculates a company's profitability by subtracting operating expenses from operating revenues.