Question-2 Suppose we have a monopolist supplying two different markets. The demand in these markets Suppose we have two types of consumers, each buying exactly one unit of the product a monopolist is selling so long as their consumer surplus is non-negative. If the consumer has a choice, she or he will buy the product that gives them the highest consumer surplus. the monopolist has estimated the indirect utility (GS) of each type of consumer as V1=6z1'P1 "5:22102 where z = {7.1, zz} is the quality chosen by the monopolist i.e. vertical differentiation. The monopolist does not know each consumer's type. There are 391 type one consumers and 101 type two consumers. Finally suppose the marginal cost for all quantities is given by c(z) = i7} . Q-2-a What are the lowest qualities type 1 and 2 consumers will demand. Q-2-b What are the participation constraints of the two types of consumers Q-2-c What are the incentive compatibility constraints for type 1 and 2 Q-Z-d The monopolist has three options: - Sell only to high type consumers - Sell to both consumers the same quality product - Sell to both type of consumers but different quality products. Solve for all these options and determine which one is best