1 Suppose there are 100 consumers in a small town, each with an identical demand curve, given by:

where q is the amount an individual buys and p is the price they pay.

Suppose that a monopoly firm facing this market has a total cost function given by TC = 2Q, where Q is the total output of the firm. Assume that the firm knows the equation of the identical demand curves, so that it is able to price the good according to a two-part tariff scheme.