Suppose the demand for a good consists of two types of consumers: type 1 whose demand is given by

1=30(+1)2q1=30(A+1)2p and type 2 whose demand is given by 2=60(+1)4q2=60(A+1)4p, where p is the price of the good and A is the 5th digit in your student number.

a) Which consumer type is the "high willingness to pay consumer"? As usual, justify your answer. (4 marks)

b) Suppose the good is sold by a monopoly firm which is able to practice 2nd degree price discrimination using two-part tariffs and can monitor and restrict the quantity of each customer. Determine the profit maximizing two-part tariffs assuming the firm's average cost is constant and equal to 10 and (for simplicity) that there is one person of each type. (12 marks)

c) Is the allocation in part (b) efficient? Explain. (4 marks)

d) Are the optimal tariffs you found in part (b) consistent with quantity discounts being present? Carry out the necessary calculations to justify your answer. (5 marks)