Problem 2. A monopolist faces a customer who is one of two possible types, with equal...
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Problem 2. A monopolist faces a customer who is one of two possible types, with equal probability, described by the utility functions: U(x,T) : = f* P;(y)dy T, i {1,2} 1 P(x):= 1- x, P(x) = 1 - The monopolist's cost function is C(x) = 0. The customer's reservation utility is 0. 1. Compute the seller-optimal quantities and prices under perfect price discrimination. 2. Suppose the monopolist can not price discriminate. Compute the seller-optimal linear price and quantities. 3. Suppose the monopolist is restricted to adopt a single two-part tariff (t, f), where t is the unit price and f the lump-sum fixed fee. Compute the optimal tariff if the seller intends to serve both types of customers. 4. The monopolist offers his customer a menu of price-quantity combinations: M:= {(x1, T1), (x2, T), (0,0)}, from which the customer is free to choose one (and only once). What are the optimal price-quantity combinations? Problem 2. A monopolist faces a customer who is one of two possible types, with equal probability, described by the utility functions: U(x,T) : = f* P;(y)dy T, i {1,2} 1 P(x):= 1- x, P(x) = 1 - The monopolist's cost function is C(x) = 0. The customer's reservation utility is 0. 1. Compute the seller-optimal quantities and prices under perfect price discrimination. 2. Suppose the monopolist can not price discriminate. Compute the seller-optimal linear price and quantities. 3. Suppose the monopolist is restricted to adopt a single two-part tariff (t, f), where t is the unit price and f the lump-sum fixed fee. Compute the optimal tariff if the seller intends to serve both types of customers. 4. The monopolist offers his customer a menu of price-quantity combinations: M:= {(x1, T1), (x2, T), (0,0)}, from which the customer is free to choose one (and only once). What are the optimal price-quantity combinations?
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1 Under perfect price discrimination the monopolist can charge each customer their willingness to pay maximizing their profits To find the optimal qua... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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