Homework 2 1. (Price Discrimination) A. Indicate the types of price discrimination for the cases below. Based on the above examples, explain the difference between these types of price discrimination. Case A1. When you purchase an airline ticket from the website www.priceline.com, you can choose either the economy class or the business class at different prices. In addition, it offers a deal that combines the flight ticket with the car rental and the hotel reservation with further discount. Case A2. Many bars in NYC offer customers the happy hour price discount, i.e., much lower prices for drinks if customers drop by on weekday afternoons. Moreover, some bars will waive the entrance fee for the ladies but charge the gentlemen the full entrance fee. Case A3. At Men's Wearhouse, a men's clothing retail chain store, it often offers customers the deal "buy one and get the second one half off ". Moreover, sometimes it may give the first-time new customers some special discount, say a ten dollars coupon. 2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160-q1-q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. Q. Derive each firm's best response function. B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm. D. Find the equilibrium consumer surplus and consumer surplus in this market