Problem
We considered a large manufacturing monopoly selling to individual retailing monopolies. There were eight retailers, three of whom face demand of the form p = 12 - 9x, and five of whom face demand of the form p = 12 - 6x. Well, it turns out that there are actually ten retailers - the eight described above and two more who face demand of the form p = 12 - 2x. Costs of production and sales are zero. The retailers are price takers in their dealings with the manufacturer. The manufacturer can set a fixed fee F and a per unit charge P; the retailers take these as given and decide (a) whether to participate at all, and (b) if so, how many units to purchase. The fixed fee and per unit charge must be the same for all the retailers: no discrimination is allowed.
(a) What is the optimal fixed fee to charge if P is set at zero?
(b) What is the optimal fixed fee to charge if P = 1?
(c) What is the optimal fixed fee and per-unit charge?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.