Suppose the Bluemont Hotel in Aggieville has a summer demand of: P1 = 120 - 4Q1, where P is the price of a room per night, and Q is rooms sold. Fall demand (football!) is given by P2 = 200 - 2Q2. The hotel's marginal costs are MC = 20 + 2Q, which is increasing in Q due to capacity constraints. Suppose that the hotel engages in peak load pricing. The marginal cost is higher during the ____________ , during which time the hotel charges a _________ price. 0 fall; lower 0 fall; higher 0 summer; lower 0 summer; higher Why is the pricing of Gillette safety razors a form of two-part tariff? O the razor is the entry fee and the blades are the usage fee 0 the razor and blades are purchased together 0 The razor and blades can be purchased as a package or separately 0 the razor and blades have different packages Suppose that you were hired to advise Gillette on how to determine the two parts to the tariff. What advice could you offer? 0 When consumers have different demands, set blade price equal to MC and the razor price should equal CS for each consumer Q When consumers have identical demands, set blade price equal to MC and the razor price should equal CS for each consumer Q When consumers have different demands, set blade price equal to zero and the razor price should equal CS for each consumer Q When consumers have identical demands, set blade price equal to zero and the razor price should equal CS for each consumer Suppose that farm equipment can be rented under two alternative plans: (1) A two-part tariff: pay an annual membership fee and then pay a small fee for the daily rental of each piece of equipment (2) A straight rental fee: pay no membership fee, but pay a higher daily rental fee. Why offer the customer the choice of two plans rather than simply a two-part tariff? O This increases efficiency by increasing consumer choice O This increases profits by combining a two-part tariff with third degree price discrimination O This increases efficiency by reducing production costs O this increases profits by combining a two-part tariff with intertemporal price discrimination