Question
You are a monopolist of cherts and one of many sellers of flints. Consumers buy either zero or one unit of chert; never more. Each
You are amonopolistof cherts and one ofmanysellers of flints. Consumers buy either zero or one unit of chert; never more. Each consumer is willing to pay $20 for a chert. Your marginal cost for a chert is $4.
You also sell into the Flint market, where your marginal cost, like that of all other Flint sellers, is $2. In the Flint market, you are one of many perfect competitors. Each consumer is willing to pay $15 for one unit of flint. What is your profit, if you price cherts and flints independently? Do consumers who buy a unit of chert make any consumer surplus when you price cherts and flints independently? Explain, using numbers.
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