Question 6 Suppose there are two types of consumers, type I and 2, with demand func- tions P(Q1) = 20-20 , and P(Q2) = 20-402. Suppose that the firm's cost function is C(Q) = 40. The firm wants to offer two pricing schedules: (F1, 21), (F2, (2), where F; is the price the consumer must pay to get@; units of consumption. The pricing schedules are structures such that type 1 consumers choose Fi, Q1) and type 2 consumers (F2, Q2). Recall that the optimal Q1 and Q2 solve PI (Q1) = MC and P2(Q2) = MC + "(P|(Q2) - P2(Q2)), where n, and n2 are the number of type I and type 2 con- sumers, respectively. (a) Suppose that ni = 2, 000 and n2 = 1,000. Determine Q1, Q2, F1 and F2 and the firm's profit. (b) Now suppose that the firm offers the efficient level of consumption also to type 2 costumers ( and n2 remains the same as in (a)). Determine@1, Q2, Fi and F2 and the firm's profit (Note that type 1 consumers should still be better off choosing contract 1). (c) Now suppose that mi = 2, 000 and n2 = 9, 000. Determine @1, Q2, FI and F2. What happens to the distortion in @2 - does it increase of decrease compared to (a)? Determine which types are better of and which are worse off compared to (a)