Question 3 (20 points) A monopolist sells a homogeneous product in two markets, '1' and '2' These markets have demands Q1 - 1 - P1 and Q2 - b(1 p2), where b _ 1. The monopolist has zero production costs. You must provide all your workings for this question. (a) Assuming that the monopolist cannot discriminate between the two markets, calculate its profit maximising price, and the resulting profit as a function of b. [25 marks] (b) Now suppose that the monopolist decides to use two-part pricing (using a per unit price and a fixed charge) but, again, cannot discriminate between the two markets. Show that the profit maximising price and fixed charge, and the resulting profit is p = 6-1 2b f (1+b)? (1+6)- 862 and Tr 4b Explain why this result differs from the situation where the monopolist uses different two-part tariffs in each market. [45 marks] (c) What happens to the result in (b) when 6 = 1? Explain. [30 marks] Format BIU