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The individual inverse demand for customers in group one equals: P1 = 20 - q1. The individual inverse demand for customers in group 2 equals:
The individual inverse demand for customers in group one equals: P1 = 20 - q1.
The individual inverse demand for customers in group 2 equals: P2 = 20 - 2q2.
The marginal cost of production is constant and equal to $2/unit.
Calculate the profit-maximizing entry fee that serves both customer groups. As part of the answer discuss the consumer surplus customers receive from this pricing plan and the deadweight loss created by the plan. Assuming the firm sets the per-unit price equal to marginal cost.
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