An optimal two-part tariff pricing schedule maximizes consumer surplus.

Name: An optimal two-part tariff pricing schedule maximizes consumer surplus.
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Question

Quizplus · Accepted Answer

An optimal two-part tariff pricing schedule maximizes the profit of the firm, not the consumer surplus. The firm charges a fixed fee and a per-unit fee, which allows them to capture consumer surplus by charging a higher price to those who are willing to pay more.

An Optimal Two-Part Tariff Pricing Schedule Maximizes Consumer Surplus