1. Firm X is a monopoly provider of a social media app. The demand for this app is given by P. = 200 - 2q where q the number of users of the app. Firm X collects data on every user and when combined with its AI algorithm, this data can generate predictive buying behaviour for all sorts of goods and services. Thus, there is a demand for this information from advertisers which is a function of the number of users of the app. The demand for app use data is given by p= 10g - x , where x is the number of advertisers using the information. While the marginal cost of both app users and advertisers is zero, Firm X's sunk cost of maintaining the app is $D and its cost of developing and updating its algorithm is SF per period. a) What prices would Firm X charge and how much profit would it make if it regarded the app market and the app user data market as independent from one another? b) What prices will Firm X set and how much profit will it make if it regards itself as a platform (and maximizes platform profits)? C) As part of a new policy regarding digital data, the government proposes new legislation that makes each user of the app the legal owner of the data generated by their app use. The law acknowledges that by using the app. individuals agree to allow Firm X to use their data however, the new law states that app users own and are entitled to receive their own data and if they wish, sell this data to Firm X's potential competitor Firm Y. If the legislation is passed into law, Firm Y can compete with Firm X by purchasing data from each user of Firm X 's app by offering a single data purchase price $ v to each user. With this data, and their own predictive algorithm, Firm Y can provide advertisers with predictive data of equal quality to Firm X . It is assumed that Firm Y will have the same algorithm costs per period as Firm X . Assess the effect of this legislation on the price of app use, the price of predictive data sold to advertisers and consumer welfare