Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price
(This is also called an optimal two-part tariff.) What is the per-unit price it should charge, if any?
A) It should not charge a price per unit; just a flat fee to consume as much of the product as desired.
B) It should charge a range of prices from $40 to $12.
C) $12
D) $16
D
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The income elasticity of demand is a measure of
A) how demand for a product changes when the price of a substitute or complement product changes. B) how responsive consumers are to changes in the price of a product. C) how responsive suppliers are to changes in the price of a product. D) the extent to which the demand for a good changes when income changes. E) the extent to which the supply of a good changes when the demand changes as a result of a change in income.
The only Giffen goods that have been identified so far in the real world are luxury goods
Indicate whether the statement is true or false