mathsperts2 - Mathsperts II. Two Part Pricing. A monopolist...

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Mathsperts II. Two Part Pricing. A monopolist (only one seller) sells a photocopier and supplies toner. There is one consumer. If the consumer buys the photocopier, he/she then has to buy q = 1 p T where p T is the price of toner. The consumer then obtains consumer surplus (see Ec111) u = 1 2 (1 p T ) 2 p c where p c is the original price paid for the photocopier. For simplicity assume the photocopier is costless to produce, while toner costs c > 0 : (i) Suppose the consumer has bought the photocopier. The monopolist might then choose the price of toner to maximise pro±t = p T q cq where demand is as described above. What is the optimal quantity of toner sold, and at what price? Given the consumer anticipates this price for toner, what is the most the consumer is willing to pay for the photocopier (suppose if the consumer does not buy the photocopier she gets payo² U = 0) : What then is the highest price the monopolist can charge for the photocopier and ensure the sale? What is the
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This note was uploaded on 12/31/2011 for the course ECON MR 102 taught by Professor Huyduong during the Winter '11 term at RMIT Vietnam.

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