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III. Happy Valley Software (30 points) Happy Valley Software has developed a new meteorology software package that will likely revolutionize the weather forecasting industry.

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III. Happy Valley Software (30 points) Happy Valley Software has developed a new meteorology software package that will likely revolutionize the weather forecasting industry. They are looking to market the software to the following three segments: Governmental applications (500 customers) Scientific focused companies (1,500 customer) Media outlets (TV, radio) (5,000 customers) Further, assume for simplicity that: Maximum willingness to pay (price) for each segment and package marginal costs to produce the software package are presented in table below. There are no additional costs of market development. There are no fixed costs incurred for setting up each package class. Assume that segments that receive zero surplus, still will buy the package. If customers get the same surplus from two versions, they will buy the Premium version. They have developed the following two versions of the software: Premium Marginal Cost = $10,000 Your Price: $ Maximum willingness to Weather-Guesser Marginal Cost = $1,250 Your Price: $ Maximum willingness to Segments Government Scientific Media pay $100,000 $65,000 $20,000 pay $30,000 $10,000 $7,500 a) (12 points) What is the best price point for each version of software in order to maximize revenue, assuming only one version is sold? Optimal Price Point for Premium version to maximize revenue: $ Maximum Revenue for Premium version: $ Million Optimal Price Point for Weather-Guesser version to maximize revenue: $ Maximum Revenue for Weather-Guesser version: $ Million

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