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Business, 27.06.2020 05:01 sheldavis

Two-part tariffs involve two pricing components: a fixed fee to gain access to a product or service, and a price per unit of the product or service. Examples include (1) pricing at amusement parks where there is an entrance fee and a per ride fee (you can even think of situations where the per ride fee is $0 as a special case of a two-part tariff); (2) monthly charges for access to a wireless network, plus a price per minute or some other measure of data usage; (3) membership stores, where customers are charged a monthly or annual fee, but possibly lower prices on the goods sold. Health insurance can also be viewed as being like a two-part tariff. Consumers pay a fixed premium, then consume medical services, but at a reduced rate. In the first scenario (below) you are setting a price per office visit. There is no health insurance. The fixed costs, quantity, and number of patients are per year. Set a price that maximizes profits.
Fixed cost: $12,000
Marginal cost per office visit: $15

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Two-part tariffs involve two pricing components: a fixed fee to gain access to a product or service,...
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