A bar produces a good (think of it like beer and all other related

services) with a constant marginal cost of $5 per unit. Assume for now that all

consumers have the same demand Q = 10 ? P and there are 100 students.

3. Two-part Tariff A bar produces a good (think of it as beer and all other related services) with a constant marginal cost of $5 per unit. Assume for now that all consumers have the same demand Q = 10 P and there are 100 students. a) Suppose that the bar cannot price discriminate and has to charge the same price P* for the good. Calculate the price that maximizes prots and the amount of prots. b) Suppose now that the bar can charge a twopart tariff (T, P"), where T is the cover (entrance fee) and P\" is the price per unit, i.e. a student that goes in the bar spends T + P*"Q. Calculate the two-part tariff that maximizes prots and the amount of prots. Why are P' and P\" different? c) Assume now instead that there are two types of students. Type 1 students have demand (21 = 10 P and type 2 students have demand QZ = 10 E. The population is still 100 and there are 50 of each type. Calculate the two-part tariff that maximizes the prots of the monopolist. Why is the pricing arrangement different from the one you have calculated in b)? 4. How many shops to visit? For a certain alcohol-free party you are responsible for buying 10 dozens of a certain brand of soda and there are many, many shops selling that soda. Before you do any search, you know for sure that the price per dozen at a shop is equally likely to be anywhere between $8 and $16. The time and other costs for you to visit one shop is $5. You want to search for the lowest price but you do not want to waste too much resources looking around. a) By equating the marginal benet and marginal cost of visiting another shop, solve for the optimal number of shops to visit (use the smaller round number). b) How does your answer in a) change when you are buying 20 dozens instead? c) How does your answer in a) change when the price is uniformly distributed between $6 and $12 instead