Consider a monopolist faces an inverse demand curve P(Q) = 256 - 2Q and a cost function C(Q) = 5Q

Suppose the monopolist uses two blocks in adeclining-block pricing scheme. It charges a highprice, P1, on the first Q1 units(the firstblock) and a lowerprice, P2, on the next Q2Q1 units.

Under nonuniform pricing: Calculate theprofit-maximizing values for Q1and Q2.

• Quantity sold in the firstblock: ?
• Quantity sold in the secondblock: ?

Under welfare implications (uniform pricing model to a nonlinear pricing model with two blocks)

• Change in social surplus: ?
• Change in consumer surplus: ?