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(a) The local utility company applies a "declining block" rate structure for its industrial consumers, that lower unit price is charged for higher quantity blocks of electricity and water usage. Is the company practicing any type of price discrimination? If the company incurs diseconomies of scale due to capacity limits, will it be encouraged to do so?

(b) Most cell phone rate plans are provided as a two-part tariff: a monthly access fee which includes some free minutes and a per-minute charge for additional minutes. In addition, major providers usually offer several different types of rate plans and even options within each. Why don't they simply offer a single two-part tariff to all consumers?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9685674

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