Question
We consider a monopoly that faces two types of consumers, I and II. The individual inverse demand function of a typical type-I (resp. type-II) consumer
We consider a monopoly that faces two types of consumers, I and II. The individual inverse demand function of a typical type-I (resp. type-II) consumer is PI (q) = 80 q (resp. PII (q) = 60 q), and the cost function of the firm is C(q) = 10q. We assume that the monopoly cannot discriminate between the two types of consumers, and uses bloc pricing. If the monopoly offers two bundles, 70 units at a total price of 3,150 (bundle A), or 50 units at a total price of 1,750 (bundle B), which bundles give a strictly positive surplus to a type-I consumer?
answer should be ( only bundle B)
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