# In a market of a certain good, there is a monopolist who has a constant marginal...

###### Question:

In a market of a certain good, there is a monopolist who has a constant marginal cost c = 8. There are two consumers (i = 1, 2) in this market, and their demand functions are given by p = 20 − 4q for consumer 1 and p = 25 − 5q for consumer 2. Suppose that the monopolist is trying to design an optimal two-part tariff.

A. If the monopolist maximizes its profit while it wants to attract both consumers, what fixed fee does the monopolist charge to the consumers?

(a) 121/8

(b) 116/3

(c) 95/4

(d) 17/2

(e) 191/11

B. If the monopolist maximizes its profit while it wants to attract both consumers, what price per unit of the good does the monopolist charge to the consumers?

(a) 8

(b) 11

(c) 9

(d) 15

(e) 17

C. What is the maximum profit under a two-part tariff when the monopolist attracts both consumers?

(a) 123/4

b) 71/2

(c) 242/7

(d) 38

(e) 181/5

D. What is the maximum profit under a two-part tariff when the monopolist attracts only consumer 2?

(a) 173/8

(b) 311/13

(c) 56/3

(d) 289/10

(e) 71/2

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