Question 1 (100 marks) a) Suppose REA Group is a monopoly in the market for real estate listings: that is, if a seller ofa house or apartment wishes to list it in an online database, that can only be done through realestate.com.au. Suppose that the below represent demand schedules for real estate listings in the highly affluent suburb Vaucluse and the more working-class suburb Fairfield. Vaucluse Fairfield Number of homes advertised for sale Price charged foralisting Numberofhomesadvertisedfor sale Price charged for alisting 10 $10,000 0 $10,000 20 $8,000 0 $8,000 60 $6,000 20 $6,000 200 $4,000 50 $4,000 380 $2,000 220 $2,000 400 $1,000 500 $1,000 550 $500 1100 $500 Thatis, each table represents the relationship between the price REA charges and the number of sellers that will choose to advertise their houses for sale on realestate.com.au. Assume REA's costs consist only of a marginal cost of $5 per listing. What will REA Group do to maximise its profits, if itis free to charge different prices to different postcodes? (10 points) *You are expected to show the relevant calculations. b.) Suppose that controversy over its postcode pricing policies force REA Group to pledge to charge the same price to all postcodes. What will REA Group do to maximise its profits, if it must charge all postcodes the same price? (10 points) *You are expected to show the relevant calculations. c.) What is the change in consumer surplus when REA switches to uniform pricing i) i Fairfield? ii) in Vaucluse? (40 points) *You are expected to show the relevant calculations. d.) In reality, REA Group is not quite a monopolist but shares the market with Domain, which has a small amount of market share. This affects pricing incentives for both companies. Consider the following statement: \"Because of REA's market dominance, all buyers looking for a home will check realestate.com.au, and only some will also check domain.com.au. Because of this, it's easy to sell one's property listing only on REA, but very difficult if listing only on Domain. As a result, REA has no incentive to undercut Domain's prices, but will need to match a low price if one is set by Domain. On the other hand, Domain lacks REA's market dominance, and can only hope to compete by undercutting its competitor.\" Fillin payoffs in the game below between REA and Domain to reflect the two players' payoffs as described in the above paragraph. For each player, use a maximum payoff of 4 and a minimum payoff of 1. Identify any dominant strategies and any Nash equilibria of the game. (40 points)