The most common problem encountered with two- part tariffs is that:
A)pricing at marginal cost prevents the monopolist from breaking even.
B)this pricing scheme is illegal in most jurisdictions.
C)the consumers are heterogenous.
D)the monopolist finds estimating consumer demand too costly.

Question

Quizplus · Accepted Answer

The most common problem with two-part tariffs is that consumers are heterogeneous, meaning they have different levels of demand and willingness to pay. This makes it challenging for monopolists to set a single two-part tariff that maximizes profits across all consumer types.

The Most Common Problem Encountered with Two- Part Tariffs Is