1. Nathaniel and Jonathan both love baseball. The minor league in their town is almost guaranteed to make it to the play-offs. Thus the following table represents the maximum prices that Nathaniel and Johathan will pay for regular season tickets and play-off tickets. Regular Season Play-offs Bundled Price Jonathan $240 $60 $300 Nathaniel $300 $40 $340 a. Compare total revenue for the baseball team under a separate pricing polity and a pure bundled price. b. Which pricing scheme should the team pick? c. In what way does your result depend on the way the two demands are correlated? How are Nathaniel's and Jonathan's demand curves correlated? Explain. 2. Consider a golf course where each golfer has an identical annual demand function P=200-4Q Where P is price per round and Q is rounds per year. MC=AC = $8. Assume for simplicity that FC = 0 a. What is the profit-maximizing single price the course should charge each golfer What is the profit-maximizing level of output? Calculate profit per golfer. b. Show that the monopolist cn make more profit using a two-part tariff with P = MC. Solve for the fixed fee and profit per golfer. c. Show that even $1 increase in price (per round to $9) would cause profit per golfer to fall from the levels is 2(b). 3. Consider a local fast-food restaurant. The following table shows the maximum price that Alex and Anna will pay for the two products: chicken nuggets and fries Maximum Price Chicken Nuggets Fries Bundled Price Alex $1.50 $1.50 $3.00 Anna $2.55 $0.45 $3.00 Assume the marginal cost of nuggets is $1.00 and the marginal cost of fries is $0.50 a. Are Alex and Anna's demands negatively or positively correlated? Explain. b. Compare all four possible single-item pricing policies to find the profit maximizing single item policy. c. Solve for profit is the restaurant engages in pure bundling. d. Assume the restaurant engages in mixed bundling. It charges $2.00 for a bundle, $2.52 for chicken nuggets and $1.50 for fries. Show that the profit under mixed bundling will be higher than under pure bundling or single item pricing.