8. (20pts) HBO has MC-0 of giving someone access to their platform. Suppose there are two...

 

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8. (20pts) HBO has MC-0 of giving someone access to their platform. Suppose there are two possible markets of people in the US, Movie Buffs and Movie Casuals. There are 50 of each. The demand of Movie Buffs for HBO is And The demand of Movie Casuals for HBO is DB (P) = 100-2p if p≥ 25 DB (p) = 50 if p < 25 Dc (p) = 50-2p a. Draw the demand curve for movie buffs. (2pts) b. Draw the demand curve for movie casuals. (2pts) C. Calculate the aggregate market demand of both Movie Buffs and Movie Casuals for HBO. (1pt) D(P)= i. d. Draw the aggregate demand curve for Movie Buffs and Movie Casuals. (2pts) e. Suppose HBO faces the market demand curve you calculated in (a). Calculate HBO's profit maximizing quantity and price, Qmon and Pmon. (2pt) f. Calculate the profits of the monopolist (don't worry about fixed costs). (1pt) g. A data gathering company "CMU Analytics" offers its service to HBO. Their algorithm can identify whether people fall into the Movie Buff category or the Movie Casual category. This would allow them to sell to the two markets separately at different prices. What kind of price discrimination is this? (1pt) h. Suppose HBO acquires the service of CMU Analytics. Calculate HBO's profit maximizing quantity and price in each market, Qmon, pmon, Qmon and mon (4pt) Relative to no price discrimination, what happens to: (4pts) i. Movie Buffs consumer surplus ii. Movie Casuals consumer surplus iii. Aggregate consumer surplus iv. Social Surplus j. Given the profits with and without the above price-discrimination, how much would HBO be willing to pay CMU Analytics for their data gathering service? (1pt) 8. (20pts) HBO has MC-0 of giving someone access to their platform. Suppose there are two possible markets of people in the US, Movie Buffs and Movie Casuals. There are 50 of each. The demand of Movie Buffs for HBO is And The demand of Movie Casuals for HBO is DB (P) = 100-2p if p≥ 25 DB (p) = 50 if p < 25 Dc (p) = 50-2p a. Draw the demand curve for movie buffs. (2pts) b. Draw the demand curve for movie casuals. (2pts) C. Calculate the aggregate market demand of both Movie Buffs and Movie Casuals for HBO. (1pt) D(P)= i. d. Draw the aggregate demand curve for Movie Buffs and Movie Casuals. (2pts) e. Suppose HBO faces the market demand curve you calculated in (a). Calculate HBO's profit maximizing quantity and price, Qmon and Pmon. (2pt) f. Calculate the profits of the monopolist (don't worry about fixed costs). (1pt) g. A data gathering company "CMU Analytics" offers its service to HBO. Their algorithm can identify whether people fall into the Movie Buff category or the Movie Casual category. This would allow them to sell to the two markets separately at different prices. What kind of price discrimination is this? (1pt) h. Suppose HBO acquires the service of CMU Analytics. Calculate HBO's profit maximizing quantity and price in each market, Qmon, pmon, Qmon and mon (4pt) Relative to no price discrimination, what happens to: (4pts) i. Movie Buffs consumer surplus ii. Movie Casuals consumer surplus iii. Aggregate consumer surplus iv. Social Surplus j. Given the profits with and without the above price-discrimination, how much would HBO be willing to pay CMU Analytics for their data gathering service? (1pt)

Answer rating: 100% (QA)

ANSWER a Demand curve for movie buffs b c aggregate demand curve for serious and casual moviegoers Demand overall Demand from moviegoers plus demand for casual movies For p 25 DP50502p1002p DP1002p fo... View the full answer