Consider a problem faced by Kamera Company. They have developed a patented new camera that can be produced at a constant unit cost of $1. The film is available competitively at zero price. Consumers derive utility only from the combined services of the camera and film - which can be measured by pack of film consumed per period. Assume that there are two consumers with inverse demand

p₁ = 8 - 4q₁/3

p₂ = 12 -3q₂/2

a. Consumers will purchase only one camera at most; hence consumer surplus can be viewed as measuring what they would pay to for a camera. If Kamera must charge both customers the same price for a camera, what is the price it will charge and what is its profit?

b. Assume now that Kamera decides to tie film to its camera. It requires customers to purchase the firm from Kamera if the wish to buy the camera. Kamera simply buys the film on the market at zero price and resells it. What are the prices of camera and film that Kamera will charge, and what is its profits? Is tying profitable? Explain.