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:

Necessities

Goods and services that are essential for survival, such as food, shelter, and healthcare, often characterized by inelastic demand.

Luxuries

Goods or services that are considered non-essential but are desired for their ability to provide comfort, convenience, or pleasure.

Elasticity Of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good.

Inputs

Resources used in the production process, including labor, capital, materials, and energy.