4. [18 points] Your firm has a monopoly with its Valet-I (pronounced val-ay-eye) app. It knows whats in the users closet and whats in their calendar, and uses artificial intelligence to plan their wardrobe, ordering pieces as needed from the hottest brands to complement their unique and personal style.Your only marginal cost is 1 each time it is downloaded on the Apploid Store. You have correctly calculated that 10 maximizes European profits if you have to charge each consumer the same price,and at that price you have 100,000 downloads per period.

a. [6 points] The Apploid store is considering replacing the per-download fee with a per-period fee of 100,000 regardless of the number of downloads. If the Apploid store makes this change: explain the effect, if any, that it would have on your per-period price and quantity? explain what effect, if any, that is would have on your per-period profits.

b. [6 points] Market research tells you that some consumers are more price sensitive to others. Unfortunately, when a customer is looking at your app on the Apploid store, you do not know the customers price sensitivity. Explain a possible product or pricing strategyconsistent with 2nd degree price discriminationthat your firm can use to increase profits.

c. [6 points] The Apploid Store where consumers purchase your app agree to not only let you know each consumers (or potential consumers) country of residence, but will also allow you to charge different prices in different European countries. Explain what other information will you need, and how you can use this information to increase European profits.