ECON 4340 Question 3

Question 3: A monopoly faces two types of consumers (for simplicity assume that there is one of each type} with inverse demand functions given by p091) = 120 29. md 1109:) = 90 0.592 mu! Suppose that the costs of production are given by: C (Q) = 292 Where Q is the total output for both markets. (a) Suppose that the firm cannot discriminate between the consumers so it offers one linear price. Find the linear price and also the consumption by each consumer. Find the prots of the rm, consumer surplus and total welfare. is there any deadweight loss? If so calculate it (b) Suppose that the firm can exercise third degree price discrimination (with linear prices}. Find the linear prices that it will charge and also the consumption of each consumer. Find the firm prots. if there is any deadweight loss in this case find it. (c) Suppose that the firm can exercise group pricing with two-part tariffs. Find the two-part tariffs that it will charge, the consumption of each consumer and firm prots. if there is any deadweight loss in this case find it (d) if the rm can charge only one two-part tariff what taro-part tariff will it choose? Calculate consumer surplus and rm prots. If there is any deadweight loss in this case nd it