A monopolist knows that there are two types of consumers, “high demand” (H) and low demand...

A monopolist knows that there are two types of consumers, “high demand” (H) and low demand (L) types. Inverse demand for each consumer of the two types is p = 50 − q_L and p = 100 − q_H . 60% of consumers are of the L type. Marginal cost is zero.
a) Find the optimal price if the firm can only set a single price. (One way to do this is to pretend that there are 6 consumers of the L type and 4 of the H type, then construct a total demand curve, then calculate.
b) Suppose that the firm can set a fee for purchasing any amount, plus a price per unit. Explain, using a diagram, how the firm can earn more from this strategy than from using a single price (without a fee).

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Rahul Sunny answered 1 year ago

A monopolist knows that there are two types of consumers, “high demand” (H) and low demand...

A monopolist knows that there are two types of consumers, “high demand” (H) and low demand (L) types. Inverse demand for each consumer of the two types is p = 50 − qL and p = 100 − qH . 60% of consumers are of the L type. Marginal cost is zero. a) Find the optimal price if the firm can only set a single price. (One way to do this is to pretend that there are 6 consumers of...

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A monopolist knows that there are two types of consumers, “high demand” (H) and low demand...

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