If Marginal Cost Is Zero, with an Optimal Two-Part Tariff

question 144

Multiple Choice

If marginal cost is zero, with an optimal two-part tariff

• A)total revenue is maximized.
• B)consumers maximize their surplus
• C)the firm does not have to charge a fixed-fee portion.
• D)firms may not maximize profit.

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Definitions:

Initial Deposit

The first sum of money placed into an account or investment, serving as the starting balance.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.

Future Value

The future value of a current asset, calculated by applying an estimated growth rate over a specific period.

Interest Rate

The percentage charged on a loan or paid on an investment, representing the cost of borrowing or the income from lending.