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Essay / Research Paper Abstract
This 8 page paper explains how firms try to extract consumer surplus using two part tariffs, theory and examples as used including the utilities and information and telecommunications industries. The bibliography cites 9 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEconsurplus.rtf
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Unformatted sample text from the term paper:
and demand, the point at which the supply and the demand lines cross results in the price that is charged, in turn there are many influences on the supply and
demand. While this model is accurate and describes the way the markets operate, it is not uniquely correct and can be expanded as the process that are seen in the
market are what consumers are prepared to spending order to gain sufficient numbers of buyers and the level at which sufficient buyers will act, so the level may be seen
as a lower level that is potentially acceptable by a number of other buyers (Nellis and Parker, 2000). If we consider the
fact that as the price goes up the level of the demand will drop, this means that there are still some consumers who would be willing to pay a higher
price than that which is charged for a good. A company will want to maximise their income and as such will often
look to gain a balance between the level of goods they can sell and the price, along with elasticity factors and marginal costs to find the optimal levels of sales.
However, this may also be seen as losing some potential income at the cost of making more sales one way that companies have sought to get around this an maximise
income is to use two part tariffs. Many companies may want to take advantage of the way some consumers will be prepared to pay more, however methods such as
dynamic pricing may not be a sufficiently strong or flexible pricing structure. To consider how business may seek to define and make the most of the potential consumer surplus we
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