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Write the profit function for the monopolist firm

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A monopolist firm produces a special soft drink. There are 20 H-type and 40 L-type consumers with the following demand functions:

PH = 16 - QH PL = 12 - QL

(Note that these are individual-level demand functions.) The marginal cost of producing 1 unit of product is $4. The firm knows that there are 2 types of consumers but cannot identify who is who. The firm can sell its products either in single units, or can pack them (4-unit pack, 6-unit pack, etc.).

a) Write the profit function for the monopolist firm (with restrictions, if any).

b) What is the best pricing and packing policy for the monopolist firm?

Reference no: EM132542163

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