A monopoly is designing two take-it-or-leave-it contracts of the form (gi, ri) for two consumer types i = A, B where q, is the quantity supplied and r, is the overall price paid for the package. The two consumer types are represented by the following utility functions: UA(x. y) = y-+41 x, UB(x,y) = y-x +91 x, where x is the number of units of the monopolist's good consumed and y is the remaining income spent on all other goods. You may assume that the income of each consumer is M, where i = A, B. What are the willingness-to-pay and the self-selection constraints for each consumer type? Please make sure to use capital letters A, B not lower-case a, b. To enter a subscript ra, please use the code r_A, and for inequalities S.2 please use <=,>=, The willingness-to-pay constraints are: The self-selection constraints are:
A monopoly is designing two take-it-or-leave-it contracts of the form (gi, ri) for two consumer types i = A, B where q, is the quantity supplied and r, is the overall price paid for the package. The two consumer types are represented by the following utility functions: UA(x. y) = y-+41 x, UB(x,y) = y-x +91 x, where x is the number of units of the monopolist's good consumed and y is the remaining income spent on all other goods. You may assume that the income of each consumer is M, where i = A, B. What are the willingness-to-pay and the self-selection constraints for each consumer type? Please make sure to use capital letters A, B not lower-case a, b. To enter a subscript ra, please use the code r_A, and for inequalities S.2 please use <=,>=, The willingness-to-pay constraints are: The self-selection constraints are:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A monopoly is designing two take-it-or-leave-it contracts of the form (gi, ri) for two consumer types i = A, B where q, is the quantity supplied and r, is the overall price paid for the package. The two
consumer types are represented by the following utility functions:
UA(x, y) = y –+ 41 x, UB(x, y) = y – x +91 x,
where x is the number of units of the monopolist's good consumed and y is the remaining income spent on all other goods. You may assume that the income of each consumer is M, where i = A, B.
What are the willingness-to-pay and the self-selection constraints for each consumer type? Please make sure to use capital letters A, B not lower-case a, b. To enter a subscript ra, please use the
code r_A, and for inequalities <. 2 please use <=,>=.
The willingness-to-pay constraints are:
The self-selection constraints are:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F894bdf24-0c9c-43db-b9aa-e938851cce9d%2Fdd470e43-8422-4b4e-a4a8-427ae03041ac%2Fufx47tpe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A monopoly is designing two take-it-or-leave-it contracts of the form (gi, ri) for two consumer types i = A, B where q, is the quantity supplied and r, is the overall price paid for the package. The two
consumer types are represented by the following utility functions:
UA(x, y) = y –+ 41 x, UB(x, y) = y – x +91 x,
where x is the number of units of the monopolist's good consumed and y is the remaining income spent on all other goods. You may assume that the income of each consumer is M, where i = A, B.
What are the willingness-to-pay and the self-selection constraints for each consumer type? Please make sure to use capital letters A, B not lower-case a, b. To enter a subscript ra, please use the
code r_A, and for inequalities <. 2 please use <=,>=.
The willingness-to-pay constraints are:
The self-selection constraints are:
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