A monopolist produces two goods, goods 1 and 2. consumer in this market have reservation price r₁ and r₂. Each consumer, then, can be represented by a point on the following graph. For example, consumer A would reservation priceand for the two goods. This is depicted below with some points representing consumers B-F.

a) Suppose that the monopolist sells the two goods separately (i.e., follows the separate pricing strategy) at price p₁ and p₂ such that ( ) and () . Illustrate these two prices on the reservation price graph(i.e., illustrate all the prices for good 1 that equal p₁ and all the reservation prices for good 2 that equal p₂). Illustrate which consumers buy which goods at these two prices

(b) Suppose that the monopolist sells the goods only as a bundle (or follows the pure bundling strategy) at price p_B. Illustrate this price on the reservation price graph. (i.e., Illustrate all reservation prices for which r₁+r₂ = P_B). Illustrate which consumers buy which goods at this price.

(c) Suppose the monopolist sells the goods under a mixed pricing strategy, so that products are available separately at prices p₁ and p₂ as well as in a bundle. Illustrate the three prices on a reservation price graph. Illustrate which consumers buy which goods at these price.

(d) Using your graphs, illustrate why mixed bundling may be a desirable policy.

This is the graph ( mentioned above)