Learn with the Two-Part Tariff Homework Help for Pricing with Myhomeworkhelp.Com
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Before we go on, let’s understand some basics of the subject:
What is the two-part tariff strategy?
This is a technique used in pricing strategy where the price of the product is composed of two segments:
- A-lump-sum fee: which generally varies
- Unit charge: unit charge is generally put equal or above the marginal production cost of the product for a rational firm. In case the firm is targeting a perfect monopoly, they will put it charge either equal to or below the price to attain monopoly.
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This is a technique of price discrimination which includes that firms will charge a consumer with a lump-sum fee which is related to the right of their purchase along with the per unit price which is consumers by the buyers.
In this type of price discrimination strategy, the company set a particular enrollment fee for the consumers along with a per-unit charge of the product they consume later in order to maximize the profit of the company. It is important for the company to set a particular price which is equal to the marginal cost which helps in maximizing the amount on each product which is bought by a consumer. And subsequently, the firm sets a fixed fee which helps in gathering the appropriate consumer surplus.
At first, the firm sets a fixed tariff; let’s say A, for extracting the maximum consumer surplus to attain a great monopoly in the market. And the second tariff is the price of each unit which is p*q, which is similar to the marginal cost. This scenario will mean that there is none consumer surplus as a company cannot extract the surplus more than once. With the two-part tariff homework help,we will help you with different calculations which will help you abetter quality of your homework need.
Where is this technique used?
This type of technique is really common with a golf club, Entertainment Park or amusement parks. Consider an example of anamusement park. You are required to pay a certain amount while you enter in the park. Now when you think of taking any rides inside the park, you are asked to buy the tickets for that particular ride. This is strategy is called the two-part tariff pricing strategy
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