Question : 11) Compared to monopoly pricing, an optimal two-part tariff A) reduces : 1387956

11) Compared to monopoly pricing, an optimal two-part tariff

A) reduces economic efficiency.

B) eliminates the deadweight loss.

C) equates marginal revenue and average revenue.

D) increases consumer surplus.

12) 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.

13) A firm using a two-part tariff can produce the economically efficient outcome by

A) making the fixed-fee portion of the price as low as possible.

B) setting the per-unit portion of the price equal to the marginal cost of production.

C) setting the per-unit portion of the price equal to the average cost of production.

D) setting the fixed-fee portion of the price at some proportion to the fixed cost of production.

14) With an optimal two-part tariff,

A) consumer surplus equals producer surplus.

B) all consumer surplus is transformed into profit.

C) consumers maximize consumer surplus.

D) the firm earns zero profit.

15) If marginal cost is zero, with an optimal two-part tariff,

A) total revenue is maximized.

B) consumers maximize their surplus

C) the firm does not have to charge a fixed-fee portion.

D) firms may not maximize profit.

Figure 16-5

16) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the quantity it should produce?

A) 240 units

B) 320 units

C) 480 units

D) 560 units

17) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the per-unit price?

A) $28

B) $24

C) $12

D) $8

18) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the revenue collected from the fixed fee portion of the price?

A) $10,240

B) $7,870

C) $2,560

D) $1,440

19) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the profit earned under this pricing scheme?

A) $5,760

B) $6,400

C) $7,680

D) $7,870

20) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the quantity it should produce?

A) 240 units

B) 320 units

C) 480 units

D) 560 units