You are an executive for Super Computer, Inc. (SC), which rents out super computers. SC receives a
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a. Suppose that you could separate business and academic customers. What rental fee and usage fee would you charge each group? What would be your profits?
b. Suppose you were unable to keep the two types of customers separate and charged a zero rental fee. What usage fee would maximize your profits? What would be your profits?
c. Suppose you set up one two-part tariff—that is, you set one rental and one usage fee that both business and academic customers pay. What usage and rental fees would you set? What would be your profits? Explain why price would not be equal to marginal cost.
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