1.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

D(P) = 100 - 2p if p >= 25

D(P) = 50 if p < 25

The demand of Movie Casuals for HBO is

D(P) = 50 - 2P

a.Draw the demand curve for movie buffs.

b.Draw the demand curve for movie casuals.

c) Calculate the aggregate market demand of both Movie Buffs and Movie Casuals for HBO.

d) Draw the aggregate demand curve for Movie Buffs and Movie Casuals.

e) Suppose HBO faces the market demand curve you calculated in (c). Calculate HBO's profit maximizing quantity and price, Qmon and Pmon.

f)Calculate the profits of the monopolist (don't worry about fixed costs).

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?

h)Relative to no price discrimination, what happens to:

i.Movie Buffs consumer surplus

ii. Movie Casuals consumer surplus

iii.Aggregate consumer surplus

iv.Social Surplus