ECON 601 Final: ECON 601 Iowa State Econ601FinalF14
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Harvey lapan: consider a monopoly firm with cost curve: q= , where costs are measured in terms of the numeraire good. The firm has two types of customers, with quasi-linear preferences as follows: There are an equal number of each type of customer. In the above, ( consumption vector of customer of type h, where m is the numeraire whose price is one and x is the monopolist"s product. Assume each consumer"s income is high enough so that solutions are interior. ,h: consider the case of pure monopoly, in which the firm charges the same price to all customers, and customers choose how much to buy at that price. Find the profit maximizing solution for the monopolist, and calculate the inefficiency (deadweight loss) due to pure monopoly. (11 points: second degree price discrimination. Suppose the monopolist can offer two different packages.
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