QQ. Here is my question I need help with: Monopoly in the market for news. The CNN is considering offering articles to readers online. Assume that it costs $9,000 per month to hire a web designer and that Lola University will provide the newspaper web hosting service totally free. That is, there is no marginal cost associated with serving any articles; total costs are just a flat 9,000 per month. It turns out that the CNN does not operate in a competitive market for provide online news. In fact, it supplies online news monopolistically to CNN Students. Assume that each CNN student has an inverse demand function for monthly news particles of p = 1 - (x_s/100), that is if the newspaper wants each student to read x_s articles per month, it must charge a price of p to read each article.
- Assume that the newspaper can't differentiate students from teachers and can only charge a fixed price per article. Find out the profit maximizing price if fraction (lambda) of the CNN population are teachers and (1 - lambda) are students.