5. True or false? (No points without justification)

(a) Suppose that a firm has a monopoly over the market for printers, which brings value only when used with cartridges. The monopoly lets a competitive market provide the cartridges. There are two types of consumers (high and low demands for cartridges). The monopolist wants to sell to both types. If the proportion of low types increases, then the price of the printer will go down. (10 points)

(b) In monopolistic competition, the socially optimal number of firms is always smaller than the equilibrium number of firms. (10 points)

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