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Dolcezza sells gelato to two types of consumer, people on a diet, and people who aren't on a diet. A dieter's surplus from buying an
Dolcezza sells gelato to two types of consumer, people on a diet, and people who aren't on a diet. A dieter's surplus from buying an s scoop portion at price p is Ds - p, whereas a non-dieter's surplus would be his - p. D and H are preference parameters. with N =- D. Dolcezza decides to sell two sizes: medium {a 5M scoop portion fortotal price pm} and large {51 scoops for price pL }. Consumers can hullI whichever size they,i like. A. Determine the conditions under which non-dieters will wealth;I prefer a large to a medium, and dieters will weakly prefer a medium to not purchasing. B. Suppose both weak inequalities in {a} bind. {That is, the "=\" part of \"a\" applies} Use them to find an expression for a non-dieter's surplus from a large gelato in terms of D, N, and 5\". Explain briey [a sentence or two} how this affects Dolcezza's decision about the size of a medium gelato
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