A monopoly is designing two take-it-or-leave-it contracts of the form (q., r,) 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, UR(x, y) y-x2 + 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 <,>s, 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 (q., r,) 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, UR(x, y) y-x2 + 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 <,>s, The willingness-to-pay constraints are: The self-selection constraints are:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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