Which of the following best describes a two-part tariff?
A)A discount provided to frequent shoppers
B)A price that varies with the quantity of output consumed
C)A price that varies with each individual consumer's ability to pay
D)An entry fee followed by a constant per-unit price

Question

Quizplus · Accepted Answer

A two-part tariff involves an entry fee (fixed fee) followed by a constant per-unit price. This pricing strategy is commonly used for products or services that have high fixed costs, such as membership fees for a gym or amusement park. The entry fee covers a portion of the fixed costs while the per-unit price covers the variable costs of each unit consumed. A two-part tariff is different from other pricing strategies, such as discounts or sliding scales, that vary the price based on output or consumer characteristics.

Which of the Following Best Describes a Two-Part Tariff