Compared to Monopoly Pricing, an Optimal Two-Part Tariff

question 109

Multiple Choice

Compared to monopoly pricing, an optimal two-part tariff

• A)reduces economic efficiency.
• B)eliminates the deadweight loss.
• C)equates marginal revenue and average revenue.
• D)increases consumer surplus.

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Definitions:

Job-Order Costing System

An accounting system that tracks costs individually for each job, suitable for companies producing unique products or services.

Activity-Based Costing

A costing technique that determines the cost of a product based on the activities involved in its production and the extent to which the product uses those activities.

Manufacturing Overhead

Costs related to the production process that are not directly tied to the product, such as rent for the manufacturing space, utility costs, and salaries for manufacturing management.

Traditional Costing System

A costing method that assigns manufacturing overhead costs to products based on volume metrics such as machine hours or labour hours.