A natural monopolist has total costs C(Q) = 500 + Q and faces market demand Q = 2000 - 2P

1. Find CS, PS, and total surplus in a. CS = * (875 - 750) * 250 = 15625 PS = * (750 - 750) * 250 = 0 TS = CS + PS = 15625
2. Assume he regulator allows two-part pricing. The monopolist's regulated price is set equal to marginal cost and the monopolist is allowed to freely choose and charge a fixed fee per consumer. Assume that the demand comes from 10 identical consumers. What fixed fee would a profit-maximizing monopolist set? How about total surplus, CS, and PS? P = MC MC = C'(Q) = 1 ??

I am stuck with question 2. please help me!

Answer rating: 100% (QA)

Youre on the right track Lets solve for the fixed fee consumer surplus CS producer surplus PS and total surplus TS under the twopart pricing scheme 1 ... View the full answer