For Questions refer to the following information:
A municipal water utility employs quasi-fixed capital inputs-are the water treatment plant and distribution lines to homes-to supply water to 20,000 households in the community it serves. The figure below shows the cost structure of this utility for various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is $$P = 24 - 0.0004 Q _ { d }$$ .
-Two-part pricing is a desirable method of pricing water because

Question

For Questions   refer to the following information:
A municipal water utility employs quasi-fixed capital inputs-are the water treatment plant and distribution lines to homes-to supply water to 20,000 households in the community it serves. The figure below shows the cost structure of this utility for various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is $$P = 24 - 0.0004 Q _ { d }$$ . 
-Two-part pricing is a desirable method of pricing water because

Quizplus · Accepted Answer

Two-part pricing can eliminate deadweight loss by charging a fixed fee plus a per-unit price equal to marginal cost, thus achieving allocative efficiency.

For Questions Refer to the Following Information: a P=24−0.0004QdP = 24 - 0.0004 Q _ { d }P=24−0.0004Qd​

For Questions Refer to the Following Information:
a $P = 24 - 0.0004 Q _ { d }$