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.

---

Definitions:

Strike Activity

The act of employees stopping work in protest against their employment conditions, aiming to pressure employers to meet their demands.

Strike Replacements

Workers who are hired to fill in for employees who are on strike, often to keep the company operational during labor disputes.

Defensive Lockout

A strategy used by employers to prevent employees from working during a labor dispute to protect the company's assets or interests.

Expected Strike

A labor action anticipated by both employers and employees, typically following unsuccessful negotiations or escalating labor disputes.