When will setting a relatively high entry fee and a low competitive price be the best strategy for a two-part tariff monopolist?
A) When the customers are nearly identical.
B) When the customers have inelastic demand for the product.
C) When the customers place a relatively low value on their time.
D) When the customers can be separated into a number of diverse groups.

Question

Quizplus · Accepted Answer

When customers are nearly identical, a monopolist can set a high entry fee to capture consumer surplus and a low competitive price to maximize sales, as there is less variation in willingness to pay.

When Will Setting a Relatively High Entry Fee and a Low