Two-part pricing offers a mechanism whereby the firm can
A) charge two different prices to distinct groups of customers.
B) collect two times as much from consumers as a single-price monopoly can.
C) capture some or all of the consumer surplus.
D) reduce some of its fixed costs.

Question

Quizplus · Accepted Answer

Two-part pricing allows firms to charge a fee upfront (fixed cost) and a per-unit fee (variable cost), allowing them to capture some or all of the consumer surplus. This pricing scheme is often seen in club memberships, where customers pay an upfront fee to join and then pay per visit or per purchase. The fixed fee ensures some revenue, while the variable fee ensures that the customer pays for the actual use of the product or service.

Two-Part Pricing Offers a Mechanism Whereby the Firm Can