A Firm Using a Two-Part Tariff Faces a Tradeoff Because

question 79

Multiple Choice

A firm using a two-part tariff faces a tradeoff because

• A)the only way to increase the fixed-fee portion of the price is to lower the per-unit portion of the price.
• B)the only way to increase total revenue is to lower per-unit profit.
• C)any increase in consumer surplus must be offset by a decrease in producer surplus.
• D)the smaller the variation between the parts of the price, the greater the deadweight loss generated by the pricing scheme.