Which of the following is an example of a two-part tariff?
A) price discrimination based on the buyers' willingness to pay
B) charging a hookup fee plus a monthly charge equal to marginal cost
C) higher sales tax on specific products
D) different prices based on the cost of production and quantity bought
E) A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers.

Question

Quizplus · Accepted Answer

A two-part tariff involves charging customers a fixed fee or upfront payment (the first part) in addition to a variable fee based on their usage or consumption (the second part). Choice B involves charging a hookup fee (the fixed fee) and a monthly charge equal to marginal cost (the variable fee), making it an example of a two-part tariff. Choices A, C, D, and E do not involve a two-part tariff as defined above.

Which of the Following Is an Example of a Two-Part