kOS is a new mobile operating system. It is associated with the kStore, an online store for apps running on kOS. The kStore charges app developers for placing their apps in the store. It is esti- mated that the number of apps placed for sale at the kStore is zero if the fee is $100 per app and 50 if the fee is zero. For intermediate val- ues, the demand for placing apps in the store is linear. Suppose that the cost of including an additional app in the app store is zero.

Using a spreadsheet, consider all possible fees (in even dollars) from 0 to 100. Determine the store's revenue for each price and the profit-maximizing fee.

(b) Determine the price elasticity of demand at the profit-maximizing fee. Show that the "elasticity rule" holds at this value.

(c) What is the fee that maximizes total surplus?

(d) How much buyer surplus is lost when the fee increases from the surplus-maximizing to the profit-maximizing level?

(e) The government is considering the possibility of regulating the fee paid by app developers to be listed in the kOS app store. What factors would you consider in determining the regulated fee? (Note: this is an open question.)