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:

Forecasting Risk

This involves the uncertainty or the potential for deviation from expected financial or operational performance outcomes, particularly in relation to predicting future business activities.

Operating Cash Flow

Indicates the amount of cash a company generates from its ongoing, regular business activities, highlighting its ability to cover operational expenses and invest in growth without external financing.

Projected Cash Flows

Estimated amounts of money that are expected to move in and out of a business over a future period.

Managerial Options

Options available to management involving strategic choices about the direction and operations of a company, which can include expansions, acquisitions, or product development.