Consider Three Pricing Strategies That the Firm Can Pursue

question 196

Multiple Choice

Consider three pricing strategies that the firm can pursue:
a. optimal two-part tariff pricing
b. perfect price discrimination
c. single-price monopoly pricing.
Of these three strategies, which is least likely to benefit society as a whole?

• A) a two-part tariff pricing because consumers have to pay a fixed fee in addition to a per-unit price
• B) perfect price discrimination because those willing to pay higher prices are forced to subsidize those who are not
• C) Both perfect price discrimination and two-part tariff pricing do not benefit society because the entire consumer surplus is extracted by the producer.
• D) single-price monopoly pricing because there are mutually beneficial trades (between consumers and seller) that are not exploited

---

Definitions:

Quintile Distribution

Quintile distribution is a method of dividing a population into five equal groups or quintiles, based on variables such as income or wealth, to analyze economic inequality.

Income Receivers

Individuals or entities that earn income through various means such as employment, investments, or ownership of assets.

Gini Ratios

A gauge of how evenly income is distributed across a population, with a scale from 0 indicating absolute equality to 1 showing total inequality.

Income Inequality

A measure of the uneven distribution of income within a population.