A monopolist has done extensive market research and surveyed its customers individually to learn their reservation prices for its product. Suppose only two survey responses were returned to the firm. The demand curve for individual 1 is P1(q1) = 30 2q1, and the demand curve for individual 2 is P2(q2) = 40 2q2. Suppose the firm has a constant marginal cost of $4 and zero fixed costs.

a) What is the profit-maximizing quantity the monopolist should sell to each individual? Hint: The monopolist can perfectly identify each individual's demand curve.

b) What price should the monopolist charge individual 1 to maximize its profits (surplus)? Hint: Consider the take-it-or-leave-it offer described on page 4 of the Ch.26 lecture notes. You will need to calculate the correct area under the demand curve.

c) What price should the monopolist charge individual 2 to maximize its profits (surplus)? Hint: Consider the take-it-or-leave-it offer described on page 4 of the Ch.26 lecture notes. You will need to calculate the correct area under the demand curve.

d) Graph the demand curves of each individual and the firm's marginal costs in two separate graphs. In each graph, identify i. the consumer surplus extracted from individual 1, and ii. the consumer surplus extracted from individual 2