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Question: suppose that there is a monopoly cable tv company who...

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Suppose that there is a monopoly cable TV company who offers two types of program: P1 and P2. There are two consumers (i = 1, 2) in this market, where consumer 1 has WTP of $12 for P1 and $10 for P2, while consumer 2 has WTP of $b 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. When b = 1,

(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.

Q9. When b = 5,

(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.

Q10. When b = 10, 3

(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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