Question 4 OCP is the monopoly seller of Soma with a constant marginal cost of production of $1 a unit. There are 100 potential consumers of Soma who belong to one of two types, heavy and light. There are an equal number of each type. The inverse demand curve of heavy users is pH(q) = 9.4 – 2q while that of light users is pL(q) = 3– q. We also assume there is no trade between different types of buyers. 1. If OCP could perfectly discriminate between the two types of buyers what two-part tariff should they charge each type to maximize profit? 2. Suppose the Government were to ban such price discrimination and required OCP to set a single two-part tariff. What would the profit-maximizing two-part tariff be? OCP cannot forbid any buyer from purchasing at the announced tariff.

2. Acme Pharmaceutical Company discovers a vaccine that prevents the common cold and has a patent that grants it a monopoly on this drug. Acme has plants in both the North America and Europe and can manufacture the drug on either continent at a marginal cost of $10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 - PE, where QE is the quantity demanded when the price in Europe is PE. In North America the demand for the drug is QN 110 PN, where QN is the quantity demanded when the price in North America is PN =

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A monopoly produces a good with a network externality at a constant marginal and average cost of c = $2. In the first period, its inverse demand curve is p 14-1Q. In the second period, its inverse demand curve is p=14-1Q unless it sells at least Q = 8 units in the first period. If it meets or exceeds this target, then the demand curve rotates out by a (it sells a times as many units for any given price), so that its inverse demand curve is p=14- - 1/10. The monopoly knows that it can sell no output after the second period. The monopoly's objective is to maximize the sum of its profits over the two periods. For what values of a would the monopoly earn a higher two-period profit by setting a lower price in the first period? . (round your answer to two decimal places) If a is

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Suppose the monopolist with a marginal cost of 2 is facing two of customers i = {L, H} with the following demand functions: Customer H: qH Customer L: qL = = 6- PH 4- PL The consumer's total payment T;(q) is T;(q) = A; + piq with lump sum payment A and per unit price p. = a. Assume that the monopolist can distinguish between the two groups of consumers. Further, suppose that A₁ 0, meaning the monopolist is charging uniform prices. Find the profit maximizing price the monopolist charges customer H and the price the monopolist charges customer L. b. Assume that the monopolist can perfectly distinguish between the two groups of consumers and can utilize a lump sum payment A¡ > 0. Find the two part tariff the monopolist charges customer H and the two part tariff charged to customer L.

Exercise 5 Consider a monopoly with marginal (and average) costs constant and equal to c. The demand function is not linear, and it is given by q = pa, where q denotes total quantity, p is the price and a > 1. 5.1. Compute the equilibrium price and quantity. 5.2. Compute the equilibrium price and quantity under perfect competition. 5.3. Compute the welfare loss due to monopoly pricing, and give a graphical representation of it.

In Fruitland, strawberries are sold in 4-litre baskets to customers on a "pick-your-own" basis. There are 2 farmers who sell strawberries: Mickey and Kit. There are no costs of supplying strawberries for sale for either farmer, so each has MC = ATC = 0. Profit therefore is simply TR. Market demand for strawberries is given in the accompanying table. If the market were served by a monopolist, the quantity traded would be 125 baskets, the price per 4-litre basket would be $7.50, and the profit for the firm would be $937.50. If Mickey and Kit decided to collude, each would have an individual quantity supplied of 62.5 baskets and each would have profits of $468.75. Suppose Mickey and Kit agree to split the monopoly outcome. Kit, acting in her own self-interest, realizes that she can cheat and supply 87.5 baskets; when she does, Kit's profits are $525.00 and Mickey's profits are $375.00. Mickey decides to retaliate and increases his supply to 87.5 baskets too; when he does, Kit's profits…

(Screening Problem) A monopolist decides both the price p and the quality q of the product he sells. Each buyer buys exactly one unit, but buyers vary in terms of their preferences for quality. There are two types of buyers: high-type with utility functions UH (q, t) = 2/q-p and low-type with utility function U (q, t) = vq – p. Let the probability of drawing a high-type buyer is 0.2. The cost of production for quality level q is just q (i.e., c(q) = q). The monopolist attempts to maximize his revenue by offering a menu of contracts {(qL, PL), (qH, PH)}. Find the optimal screening contract for the monopolist. %3D

A monopolist is deciding how to allocate output between two geographically seperated markets Note:-  Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.