A telephone company that charges both a monthly fee plus a price per minute used are employing:
A) price discrimination based on observable customer characteristics.
B) perfect price discrimination.
C) a two-part tariff.
D) the profit-maximizing rule.

Question

Quizplus · Accepted Answer

This scenario describes a two-part tariff, as there is a fixed monthly fee (the first part) and a variable price per minute (the second part). This type of pricing strategy is used by companies to capture more consumer surplus while still generating revenue from those who use their services the most.

A Telephone Company That Charges Both a Monthly Fee Plus