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A monopolist company faces two different types of consumers (type 1 and type 2). The inverse demand functions of consumer types 1 and 2 are:
A monopolist company faces two different types of consumers (type 1 and type 2). The inverse demand functions of consumer types 1 and 2 are: P1 = 400-Q, and P. = 200-Q2. Companies can impose either the same price policy (without price discrimination) or different prices on each type of consumer (with price discrimination). If we assume that the MC of monopolist is equal to zero: a. Compute the price and quantity for consumers I and 2 if the monopolist chooses a one price policy b. Compute the price and quantity for consumers I and 2 if the monopolist chooses a one price policy a price discrimination policy (3"d Degree). c. Compare consumer's surplus and producer's surplus on policies with and without price discrimination. What is the difference in the total surplus between each policy? What policy will the producer choose? d. Under what conditions 3rd Degree Price Discrimination can improve economic welfare
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