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problem iii suppose that there is a monopoly cable tv...

Question: problem iii suppose that there is a monopoly cable tv...

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PROBLEM III. Suppose that there is a monopoly cable TV company who offers two types of program: Pl and P2. There are two consumers (i = 1,2) in this market, where consumer 1 has WTP of $12 for PI and $10 for P2, while consumer 2 has WTP of Sb for P1 and $14 for P2. The company must charge the same prices to both consumers, either for the two program types separately or for the bundle of both program types. Assume that there is no marginal cost of broadcasting TV program for the company Q8. Whenb-1, (a) setting prices for the two program types separately is superior and (b) setting a price for the bundle of both program types is superior and (c) setting a price for the bundle of both program types is superior and (d) setting prices for the two program types separately is superior and (e) setting prices for the two program types separately is superior and only consumer 2 will purchase P1 under the optimal pricing the bundle price will be $22 under the optimal pricing the bundle price will be $19 under the optimal pricing only consumer 1 will purchase P1 under the optimal pricing only consumer 2 will purchase P 2 under the optimal pricing Q9. When b= 5, (a) setting prices for the two program types separately is superior and (b) setting a price for the bundle of both program types is superior and (c) setting a price for the bundle of both program types is superior and (d) setting prices for the two program types separately is superior and (e) setting prices for the two program types separately is superior and only consumer 2 will purchase P1 under the optimal pricing the bundle price will be $22 under the optimal pricing the bundle price will be $19 under the optimal pricing only consume only consumer 2 will purchase P2 under the optim r 1 will purchase P1 under the optimal pricing al pricing Q10. When b 10,

(a) setting prices for the two program types separately is superior and only consumer 2 will purchase P1 under the optimal pricing. (b) setting a price for the bundle of both program types is superior and the bundle price will be $22 under the optimal pricing. (c) setting a price for the bundle of both program types is superior and the bundle price will be $19 under the optimal pricing. (d) setting prices for the two program types separately is superior and only consumer 1 will purchase P1 under the optimal pricing. (e) setting prices for the two program types separately is superior and only consumer 2 will purchase P2 under the optimal pricing.

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