a)Firms that make game systems like Playstation and Nintendo typically charge a price close to average cost on the game system itself, and do not change that price even when the systems are scarce or demand increases. Why might this be a profit-maximizing strategy?(6 marks)

b)In the Sunday newspaper, there are usually coupons that you can clip and take to the store to save money on products. Anyone can buy a newspaper, and the value of the coupons easily exceeds the price of the newspaper for most consumers. Is this an example of price discrimination? Explain. (6 marks)

c)What are information problems affecting sellers?Give an example that illustrates how these types of problems are resolved. (6 marks)

d)Why does a new car lose substantial market value when it is purchased, but a new car left on the car dealer lot still retains its market value (answer related to asymmetric information)?

(6 marks)

How have firms and organizations devised ways to overcome information problems without government intervention?Give three examples.