Market for a product with two types of potential users

Reference no: EM13714933

Consider the market for a product with two types of potential users: group a and group b. Let's assume that the population is normalize to 1 and there are 0.5 individuals of group a and 0.5 individuals of group b. Their corresponding demand curves are as follows.

Pa = 5 - 0.5 * Qa

Pb= 10 - Qb

Let this monopolist face a constant MC of MC=2

(a) What is the optimal (profit-maximizing) two-part tariff that induces both types of consumers to buy?

(b) what is the optimal two part tariff when only high demand consumers purchase the good?

(d) Re-do a-b-c and determine which pricing scheme yields to a higher total profit is there are 0.75 individuals of group a and 0.25 individuals of group b

Reference no: EM13714933

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