Use the following to answer question:
Figure 10.11
-(Figure 10.11) If a firm uses a two-part tariff pricing strategy, the entrance fee is _____ and the per-unit price is _____.
A) $12; $8
B) $8; $12
C) $16; $8
D) $8; $16

Question

Use the following to answer question:
Figure 10.11 
-(Figure 10.11) If a firm uses a two-part tariff pricing strategy, the entrance fee is _____ and the per-unit price is _____.
A) $12; $8 
B) $8; $12 
C) $16; $8 
D) $8; $16

Quizplus · Accepted Answer

In a two-part tariff pricing strategy, the entrance fee is set to capture consumer surplus, and the per-unit price is set equal to the marginal cost. Assuming the marginal cost is $8, the entrance fee would be the remaining consumer surplus, which is $16.

Use the Following to Answer Question