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Undergrad Economics Course HW Question

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    • Thread Starter


    I am an undergraduate student majoring in economics, and I am stuck on this homework question.

    I hope someone can help me out with this one.

    A monopoly has two types of customers and is able to charge them the same two-part tariff.
    It knows that Type 1’s demand is Q1 = a1 − bp, and Type 2’s is Q2 = a2 − bp, where a2 > a1. Derive
    expressions for the optimal unit price p and fixed fee T, assuming the monopoly has constant marginal costs
    m and that it is optimal to sell
    a) to both types;
    b) only to Type 2.
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