In Two-Part Pricing with Identical Consumers, a Firm

question 7

Multiple Choice

In two-part pricing with identical consumers, a firm

• A)charges a lump-sum fee equal to the consumer surplus.
• B)sets unit price below marginal cost.
• C)should go with single-price monopoly pricing to maximize profits.
• D)Both A and B.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing to sell at a given price over a specific period.

Substitute Goods

Goods or services that serve as alternatives to each other, where a rise in the cost of one results in a higher demand for the other.

Complementary Goods

Products or services that are used together, where the increase in demand for one leads to an increase in demand for the other.

Natural Gas

A fossil fuel composed mostly of methane, used as a source of energy for heating, cooking, and electricity generation, as well as a feedstock for chemical manufacturing.