Setting optimal two-part tariffs

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Reference no: EM13912694

Which of the following statements about setting optimal two-part tariffs for many consumers is NOT true? Explain your answer.

a) The number of buyers (entrants) declines as the entrance fee (tariff) increases.

b) The profit from the entrance fee (tariff) is a concave function of the tariff because it first increases and then decreases as the tariff increases.

c) The profit from the entrance fee (tariff) is a convex function of the tariff because if first declines and then increases as the tariff increases.

d) The total profits is composed of the profit from the entrance fee (tariff) and from the profit from sales to buyers.

Reference no: EM13912694

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