Consider a monopoly cable-TV operator providing service to three consumers by transmitting three channels: CNN, BBC, and SHOP(ping). Table 6.5 shows the valuation (maximum willingness to pay) of each consumer type for eachchannel. Consumer CNN BBC SHOP 1 51 2 2 51 5 3 15 2 Table 6.5: Consumers’ valuation of three channels. Assuming zero production cost answer the following questions and prove your answers.

(a) Calculate the profit-maximizing prices assuming that the monopoly must sell eachchannel separately.

(b) Calculate the profit-maximizing price assuming that the monopoly sells all the channels in a single package.

(c) Suppose now that the monopoly can package channels any way it wants to. Which combination of packages maximize the monopoly’s profit?