Recent research suggests that if Apple switched from uniform pricing of its iTunes to two-part pricing,
A) total welfare would increase, but consumer surplus would decrease.
B) total welfare and consumer surplus would increase.
C) total welfare would decrease, but consumers surplus would increase.
D) total welfare and consumer surplus would decrease.

Question

Quizplus · Accepted Answer

Two-part pricing can increase total welfare and consumer surplus by allowing firms to extract more consumer surplus from high-value consumers while still providing access to the product for low-value consumers.

Recent Research Suggests That If Apple Switched from Uniform Pricing