All of the following price discrimination policies allow a firm to capture some of the deadweight...

All of the following price discrimination policies allow a firm to capture some of the deadweight loss or to extract some of the consumer's surplus, except:

a)Bundle pricing.

b)Tie-in sales.

c)All-or-nothing pricing.

d)Two-part tariffs.

Solutions

Expert Solution

Dead weight loss is the loss incurred to the consumer by willingness to pay more than the equilibrium price.
A) Bundle pricing is the method when goods are priced above the marginal cost of the product reduces the dead weight loss. Bundling helps to increase the Economic gain as more goods are included in it.
B) Tie in sales- Here the consumer are forced to purchase an additional product that increases the dead weight loss
C) This helps to extract the consumer surplus above the revenue generated.
D) Two part tariff- Two different prices for the same product. Initially you need to take a membership by paying a fee that helps you to get the product which is equal to the marginal cost.

B is the right answer

Rahul Sunny answered 1 year ago

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