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a. A monopolist has two possible qualities of a product that offers: premium and basic. There are 30 potential customers. Each consumer buys at most

a. A monopolist has two possible qualities of a product that offers: premium and basic. There are 30 potential customers. Each consumer buys at most one unit of the product. Their valuations for each quality level are given in the following table.

Customers

(10 in each group)

Valuation For

Premium

Valuation

For

Basic

1-10

300

150

11-20

150

100

21-30

90

50

Each unit of basic product costs 20, and premium product costs 40 to the monopolist. Which of the following gives the highest profit to the monopolist?

a) The monopolist sets the price of the basic product at 100 and the price of the premium product at 250.

b) The monopolist sets the price of the basic product at 100 and the price of the premium product at 300.

c) The monopolist sets the price of the basic product at 150 and the price of the premium product at 300.

d) The monopolist sets the price of the premium product at 150 and does not offer the basic product.

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