There are two types of consumers in a given market: there’s Type A and Type B, with the following demand curves for the product:
PA=400 – 5*QA
PB = 600 – 3*QB
The market is served by a monopolist that has zero costs of production. It cannot distinguish between the two types of consumers.
(a) If the monopolist offers two package sizes, containing 80 and 200 units each, what price should it charge for each package?
(b) Assume that the first package must contain 28 units, while the second package still contains 200 units. What prices should the monopolist charge for each in order to maximize profits?
(c) Are the monopolist’s profits higher in (a) or in (b)?
