Question: Suppose the monopolist in Problem 13 offers a menu of two-part tariff plans, with one plan intended for each type of consumer. Suppose too, as
Suppose the monopolist in Problem 13 offers a menu of two-part tariff plans, with one plan intended for each type of consumer. Suppose too, as in our discussion in the text, that for any per-minute price PL in the low-demand plan, the fixed fee in the low-demand plan leaves a low-demand consumer with zero surplus; that the number of minutes in the low-demand plan is capped at the number of minutes desired by a low-demand consumer at that plan's per-minute price; and that the high-demand plan has a per-minute price of $0.10 per minute and a fixed fee that leaves the high-demand consumer approximately indifferent between the low- and high-demand plans. Suppose that there are 100 high-demand consumers and 300 low-demand consumers. Will the monopolist's profit be higher when the per-minute price in the low-demand plan is $0.15 or $0.20?
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When the monopolists perminute price in the lowdemand plan is 015 Profit 2400 When the monopolists perminute price in the lowdemand plan is 020 Profit 2525 Explanation With a twopart tariff consumers ... View full answer
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