Which of the Following Statements Is True About Optimal Two-Part

question 209

Multiple Choice

Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

• A)The total revenue received under the two pricing schedules is the same.
• B)The total revenue received under an optimal two-part tariff exceeds that received under perfect price discrimination.
• C)The total revenue received under an optimal two-part tariff is less than that received under perfect price discrimination.
• D)The total revenue received under an optimal two-part tariff could be greater than, less than, or equal to that received under perfect price discrimination, depending on the fixed-fee portion of the two-part tariff.

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Definitions:

Quick Ratio

A measure of a company's ability to meet its short-term obligations using its most liquid assets, excluding inventory.

Warranty Expense

Costs associated with the obligation to repair or replace products within a specified period due to defects or malfunctions, recognized as a liability on the balance sheet.

Repairs

Expenses incurred to restore an asset to a condition where it can be effectively used.

Warranty Expense

Costs incurred by a company to repair, replace, or service products due to manufacturing defects or failures during the warranty period.