Suppose that a monopolist supplier imports and sells both protective masks and disposable gloves. All consumers want to purchase both items to protect against COVID-19, but consumers disagree about which item offers more protection. The type A consumers believe that masks offer more protection, whereas Type B consumers believe that disposable gloves offer more protection. The table below provides the maximum willingness to pay for each good by each consumer type.

The type A Consumers The type B Consumers

WTPM $25 $5

WTPG $20 $X

where WTP_M denotes the maximum willingness to pay for a mask, and WTP_G denotes the maximum willingness to pay for disposable gloves. To keep things simple, I am imposing the following assumptions:

There are no costs (i.e., revenue=profit),

There are equal numbers of consumers in each group (i.e., you can proceed by acting as if there were only one of each type).

And lastly, 5

a.Suppose that X=$18. If the monopolist does not bundle the two goods, what price does it charge for each. How much profit does it earn?

b.Suppose that X=$18. If the monopolist bundles the two goods, what price does it charge for that bundle. How much profit does it earn?