Recent Research Suggests That If Apple Switched from Uniform Pricing

question 121

Multiple Choice

Recent research suggests that if Apple switched from uniform pricing of its iTunes to two-part pricing,

• A) total welfare would increase, but consumer surplus would decrease.
• B) total welfare and consumer surplus would increase.
• C) total welfare would decrease, but consumers surplus would increase.
• D) total welfare and consumer surplus would decrease.

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Definitions:

Materials Price Variance

Difference between the actual cost of material and the standard cost multiplied by the amount of material purchased.

Cash Account

An account reflecting the amount of cash a company or individual has available.

Work in Process Inventory

Items that are partially completed during manufacturing, which are not yet ready for sale.

Direct Labor Costs

Costs that can be directly attributed to the production of goods or services, such as wages paid to workers manufacturing a product.