Assume downward (continuous) individual consumer demands for a monopolists product and the conditions for first-degree or perfect price discrimination are satisfied. Assume the monopolist has constant marginal cost equal to c. Also assume just two types of demanders, NL low demanders and NH high demanders, with the latter group having individual demand curves that are further to the right in the standard graph. Drawing a graph or graphs, explaining how the monopolist can use two-part tariffs to maximize profits. (Assume it is optimal to sell to both types of demanders.)

b. (4 pts.) Might it be optimal to sell to only the high demanders? If so, clarify when.

c. (4 pts.) Assume it is optimal to sell to both types of demanders. As an alternative to using two-part tariffs, suppose that the monopolist does this: (i) Each low demander is offered a deal of buying an amount Q1 for a total price T1. (ii) Each high demander is offered a deal of buying an amount Q2 for a total price T2. Identify the profit maximizing Q amounts and T amounts. (It is far and away easiest to do this appealing to a graph or graphs.)