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question is below b) Tying is generally practiced by a leasing monopoly. When a monopoly that leases/rents out 'smart' copiers to businesses. It has 2

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b) Tying is generally practiced by a leasing monopoly. When a monopoly that leases/rents out 'smart' copiers to businesses. It has 2 types of consumers: The high demand type (h) use 1500 boxes of paper and the low demand types (1) use 400 boxes of paper over the lifetime of the lease. The rm has no way of identifying consumers. It knows the demand curves for copies of each type: P = 1500 Qh, and P = 400 _ Q1. Assume MC of production is 0. 1400 1500 91; 300 400 91 Currently it leases out the machines + a servicing warranty at 80,000 for a 5-year period. Nh = 10 = number of high demand consumers and NL = 10 = number of low demand consumers. The rm now decides to change its pricing policy. It now issues the following conditional warranty: 'the servicing warranty is valid only for consumers who use the specialized paper sold by W Inc at a price of$100 per box.' At a price of$100 per box, for a high demand consumer low demand consumer Q]; = 1400 boxes ,QL= 300 boxes Consumer surplus = 980,000 = 45,000 WTP = 45,000 + 140,000 = 185,000 = 45,000 + 30,000 = 75,000 The maximum willingness to pay for the 'cgpier + warranty' of the low type is now 45 ,000 for a 5-year period. Suppose the monopoly charges for the cgpier and pamr separately. It charges the same lease rate of 45,000 for the copier to both types. (1,) Explain precisely how this pricing policy is discriminatory

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