The Second Degree Price Discrimination (Varian Figure 26.3)

This clip explains how the monopolist uses a pricing strategy to distinguish the high WTP and low WTP consumers to maximize the monopolist's own profit. From Hal Varian's "Intermediate Microeconomics," Chapter 26.

[@graceshuyu5586]

OMG you explain it sooooo clear!!! I was really confused by my prof, but i understand them just after watching the videos! Sooooo great! Keep making these! Thanks for the help!

[@jiayuepan5913]

Hi Iris, thanks so much for saving my life. This is literally the first time I actually understand them. Greetings from London

[@martinbrogaard4682]

You’re amazing - please keep making these! Greetings from Cambridge :)

[@IrisFranz]

Thanks. Happy learning/teaching!

[@vedantverma4797]

Cleared me up like a sun through a misty morning

[@motorbikemichael]

10/10 better than how it is explained in the textbook

[@IrisFranz]

Glad that it was helpful!

[@preronayasminpranty4319]

Thanks a lot! You are an amazing teacher❤️

[@meseretwubetu7826]

There are two consumers who have utility functions The price of the y-good is 1, and each consumer has a "large" initial wealth. We are given that a2 > al. Both goods can only be consumed in nonneg￾ative amounts. A monopolist supplies the x-good. It has zero marginal costs, but has a capacity constraint: it can supply at most 10 units of the x-good. The mo￾nopolist will offer at most two price-quantity packages, (rl, XI) and (r2, 22). Here ri is the cost of purchasing x, units of the good. (a) Write down the monopolist's profit maximization problem. You should have 4 constraints plus the capacity constraint xl + 22 5 10. (b) Which constraints will be binding in optimal solution? (c) Substitute these constraints into the objective function. What is the resulting expression? (d) What are the optimal values of (TI, XI) and (r2, x2)? Iwant to it answer

[@shourjyobiswas1704]

much better than book explanation

[@walidamin1035]

Thank you so much for this beautiful explanation. But I had a doubt. In the third diagram, is not the "D" portion a loss to the monopolist just like the blue triangular portion in the second diagram? Why is it paid by the buyers of high class? Sincerely waiting for your reply. Again thanks.

[@IrisFranz]

Because the high type consumers pay according to DH for a quantity higher than Xm. All the best.

[@thutrangpham7858]

OMG you are just incredible !!!!

[@sahilmaurya6450]

Loved this

[@minic9282]

got it first try! LEGEND!!

[@anandyadav6770]

Great explanation

[@IrisFranz]

Glad it was helpful!

[@marifkhan7054]

very helpful, thank you so much :-)

[@IrisFranz]

Glad to help!

[@IrisFranz]

By the way are you a fellow instructor?

[@marifkhan7054]

@@IrisFranz no ma'am, i am student from Pakistan. i live in a very backward area where network accessablity is very weak. i walk about half an hour daily to access youtube lecture. i only studied books, but without teacher it is difficult to learn. therefore for lecture related to varian book i usually watch your lecture. you provide great help to me

[@IrisFranz]

@@marifkhan7054 I admire your effort. Keep up with the good work!

[@angelluispsoria8556]

GREAT :)

[@IrisFranz]

Thank you!

[@latifaabdallah5386]

Hi