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A monopolist has two specific demanders with demand equations: qA = 10 - pA and qB = 10 - 2pB. Implementing an optimal two-part tariff
A monopolist has two specific demanders with demand equations: qA = 10 - pA and qB = 10 - 2pB. Implementing an optimal two-part tariff pricing scheme, under which demanders pay a fixed fee "a" for the right to consume the good, and a uniform price "p" for each unit consumed. The monopolist chooses values of "a" and "p" to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. 1. Solve for profits 2. Solve for average price by demander B
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