With two-part pricing, a firm
A)charges a lump-sum fee that gives the consumer the right to buy a good or service.
B)must have market power.
C)must be able to prevent resale.
D)All of the above.

Question

Quizplus · Accepted Answer

Two-part pricing involves charging a lump-sum fee (part one) that gives the consumer the right to buy a good or service at a lower per-unit cost (part two). This type of pricing strategy is often used by firms with market power, as they can set the lump-sum fee high enough to capture some of the consumer surplus while still attracting buyers who value the good or service enough to pay the fee. Additionally, firms using two-part pricing must be able to prevent resale, as otherwise consumers could potentially buy the right to access the lower per-unit cost and then resell it to others.

With Two-Part Pricing, a Firm