d) Suppose that Larry is a first-degree price discriminator, who charges a different price for each pie consumed. Find the quantity qI as well as the surplus to consumers CSI and producers PSI. How much qIi does each consumer buy and what surplus CSIi does each receive? e) Now suppose that Larry is a second-degree price discriminator who charges different prices depending on the quantity sold, by implementing a two-part tariff T(q) = a+pq. Calculate the parameters of the profit maximizing tariff aII and pII, and the total quantity qII. How much qIiI does each consumer buy, and what is the average price pIiI that each pays? f) Find the surplus to consumers CSII and producers PSII under the two-part tariff, as well as the deadweight loss DWLII. How much surplus CSIiI goes to each consumer?
Solve for part d, e and f.
Larry holds a
Moe, Curly, and Shemp are the three consumers who have the individual demand curves
q1(p) = 30 - p/ 2, q2(p) = 20 - p/ 3, q3(p) = 10 - p/ 6
a) Find the competitive
b) Find the surplus to consumers CSc and producers PSc in the competitive equilibrium. How much surplus CSci goes to each consumer?
c) Suppose that Larry must charge a single price for all pies. Find his monopoly price Pm and quantity Qm. How many pies Qmi does each consumer buy?
d) Suppose that Larry is a first-degree
e) Now suppose that Larry is a second-degree price discriminator who charges different prices depending on the quantity sold, by implementing a two-part tariff T(q) = a+pq. Calculate the parameters of the profit maximizing tariff aII and pII, and the total quantity qII. How much qIiI does each consumer buy, and what is the average price pIiI that each pays?
f) Find the surplus to consumers CSII and producers PSII under the two-part tariff, as well as the
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