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4. The Pay-no-Tax Corp. {FITS} markets both a deluxe and a standard version of its software. The deluxe version contains additional features that are likely

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4. The Pay-no-Tax Corp. {FITS} markets both a deluxe and a standard version of its software. The deluxe version contains additional features that are likely to appeal to sophisticated usms. The marginal costs of producing and distributing the two versions are virtually equal to zero. The market is equally divided into two types of users, sophisticated and unsophisticated. and there are l of each type. The maximum willingness to pay by each type of user for the standard and deluxe versions (a user will buy either the standard or the deluxe, but not both) is given in the following table: Standard Deluxe Unsopht'sticated $35 $35 Sophisticated $55 $l a. If we assume that FTC can distinguish between sophisticated and unsophisticated users (because. for instance. the sophisticated users are registered accountants} and we assume that PTC can prevent arbitrage, what are the optimal prices to be charged to each category of users\"? What is the company's prot\"? b. Assume now that the company cannot distinguish between the two types of user. What are the optimal prices for the two versions? What is the total profit

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