Suppose there are only two consumers in a remote community and one dentist. The demand for dental services from the ‘low income’ consumer is given by:

qP

= 10

– 2p and the demand for dental services from the ‘high income’ consumer is given by:

qR

= 10

– p Assume that the dentist’s total cost function is given by TC = 2q, where q is the number of visits she receives. The dentist is well aware of the possibility of using a two-part tariff scheme to charge the high income and low income consumers different prices.

(a) Determine the per-unit price the dentist will charge.

(b) Find the fixed fee the dentist will charge the low income consumer and determine how many visits the individual will make to the dentist.

(c) Find the fixed fee the dentist will charge the high income consumer and determine how many visits the individual will make to the dentist.

(d) Calculate the dentist’s profits.