Charging a price equal to marginal cost in the case of a two- part pricing strategy is efficient because:
A)pricing at cost results in low prices.
B)all potential gains from trade are realized.
C)it is a simple scheme.
D)pricing at cost is fair.

Question

Quizplus · Accepted Answer

Charging a price equal to marginal cost in a two-part pricing strategy ensures that all potential gains from trade are realized. This is because the fixed fee allows the firm to capture some of the consumer surplus, while the price equal to marginal cost ensures that the consumer pays only for the actual cost of production. This results in an efficient outcome where both the firm and the consumer are better off compared to other pricing strategies.

Charging a Price Equal to Marginal Cost in the Case