1. Produce a diagram like that discussed in class that illustrates the demand for a monopolist's...

 

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1. Produce a diagram like that discussed in class that illustrates the demand for a monopolist's output by two different types of consumers. The first consumer's demand for the monopolist's product is relatively elastic, i.e., €=-2, while the second consumer's demand is relatively inelastic, i.e., E=-0.5. For simplicity, assume that monopolist has constant marginal costs. Illustrate the profit-maximizing price that the monopolist will charge each type of consumer. Of the two types of customers, which one will pay a higher price: type 1 or type 2? 1. Produce a diagram like that discussed in class that illustrates the demand for a monopolist's output by two different types of consumers. The first consumer's demand for the monopolist's product is relatively elastic, i.e., €=-2, while the second consumer's demand is relatively inelastic, i.e., E=-0.5. For simplicity, assume that monopolist has constant marginal costs. Illustrate the profit-maximizing price that the monopolist will charge each type of consumer. Of the two types of customers, which one will pay a higher price: type 1 or type 2?

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