Question: Hello, I am trying to work through this practice test problem and am wondering if i could see a detailed solution? The market for a
Hello, I am trying to work through this practice test problem and am wondering if i could see a detailed solution?
The market for a monopolist's good consists of two types of consumers: the first has a demand given by PA = 60 3QA and the second has demand given by PB = 56 5QB. To begin with there are one of each type of consumer
a. Suppose that the cost functions is C(Q) = 6Q. If the monopolist can first degree price discriminate, what are the optimal two part tariffs to charge each type of consumer? What are the optimal block pricing bundles to sell to each type of consumer?
b. Suppose that the monopolist cannot tell the two groups apart and can only use second degree price discrimination. What is the optimal menu of bundles to offer to the consumers?
c. Now suppose that the monopolist is still restricted to second degree price discrimination, but instead of having one of each type of consumer, there are 3 consumer As and 2 consumer Bs. What is the optimal menu of bundles to offer to the consumer?
Thank you
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