1. (5 points) If you know that a competitor will lower their price if you lower your price, do you then have any incentive to lower your price? Please explain. Price 1 10 4 901 70- 30 20 7 8 9 10 11 12 13 14 15 Quantity 2. (5 points) Based on the above graph (which summarizes the demand, marginal revenue, and relevant coals for your product), determine your firm's optimal price and output and profit for each of the following scenarios: You charge the same unit price to all consumers. h. You engage in first-degree price discrimination. You engage in two-part pricing. You engage in block pricing. 3. (5 points) Three consumers who want to buy a new car have the following valuations for dealer options: Air Cond nance Power Brakes Consumer I $175 $250 Consumer 2 $300 Consumer 3 $400 $275 (a) Assume that the dealer can charge one price for Air conditioners and one price for Power Brakes. What prices will the dealer charge for each item separately to maximize its total revenue from these three consumers, and what will be its total revenue? The goods are sold individually and are not bundled together, and any of the consumers may purchase either one or both goods separately. Please explain. (b) Suppose that the firm bundles Air Conditioners and Power Brakes together and sells them as a bundle and does not sell them separately any longer. The consumers can no longer buy the goods separately, they will either have to buy a bundle containing both goods or buy nothing. No consumer will pay more for a bundle than the sum of the prices they are willing to pay for the goods separately, Le., Consumer I will not pay more for a bundle than $425, Consumer 2 will not pay more for a bundle than $700, and Consumer 3 will not pay more for a bundle than $675.What bundle price will maximize the dealer's revenue? Please explain.4. (5 points) Heathrow Airport Holdings is a private company that operates Heathrow Airport in London. Suppose the company recently commissioned your consulting team to prepare a report on traffic congestion at Heathrow. Your report indicates that Heathrow is more likely to experience significant congestion (high demand) between July and September than at other times of the year. Based on your estimates, Demand curve during high demand is Qu - 600 = 0.25P, where Qu is quantity demanded for rummy time slots between July and September. Demand curve during low demand (the remaining nine months of the year) is Q1 - 220 - 0.IPL where Qu is quantity demanded for runway time slots during the remaining nine months. The additional cost (marginal cost) Heathrow Airport Holdings incurs each time one of the 80 different airlines utilizes the runway is El, 100 provided 80 or fewer airplanes use the runway on a given day. When more than 80 airplanes use Heathrow's runways, the additional cost incurred by the company is 26 billion (the cost of building an additional runway and terminal). As a result, adding an additional runway is not an option for Heathrow, and its capacity is fixed at 80 airplanes per day. Heathrow Airport Holdings currently charges airlines a uniform fee (during both the high demand and low demand periods) of (1,712.50 each time the runway is utilized. P MC PA Pur -2400-4Qu P. MRII-2400-801 MC - C1, 100 p -2200 - 10Q MR_-2200-20Q1 Quantity Q1-80 (a) During the period of low demand (October to June) please determine the price Heathrow would charge for landings, and how many airplanes will land. (b) During the period of high demand (July to September) please determine the price Heathrow would charge for landings and how many planes will land