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3. Consider a monopolist with constant marginal cost who faces a linear demand. The monopolist is contemplating either (1) selling the prot-maximizing quantity 43* at
3. Consider a monopolist with constant marginal cost who faces a linear demand. The monopolist is contemplating either (1) selling the prot-maximizing quantity 43* at a single price p* for all units, or (2) block pricing by charging a price of pa for any quantity up to qo units, and then charging a different price p1 for any units in excess of (10. Explain why the monopolist can always earn greater prots by using block pricing, that is, by picking values of po, p1 , and go
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