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1. (25 points) A monopolist faces two types of consumers and is interested in selling to them using a twopart tariff T(Q) = a +
1. (25 points) A monopolist faces two types of consumers and is interested in selling to them using a twopart tariff T(Q) = a + PQ where a is the entry fee and P is the marginal price of the product. The cost function of the monopolist is C(Q) = 10Q. In terms of the marginal price, the consumers' inverse demand equations for the product are: Type 1: P = 200 4Q1 Type 2: P = 200 5Q2 1. Find the entry fee a and the marginal price P under the Oi twopart tariff. 2. Find the entry fee a and the marginal price P under the optimal twopart tariff. 3. Under which twopart tariff design are consumers of Type 1 better off? Under which twopart tariff design are consumers of Type 2 better off
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