Lexcorp must decide on the speed of its new model of laser printer. There are two market segments: professionals and students. It is not possible to distinguish between a professional and a student. If 0 a 1 is the speed of the printer, each professional has an RP of 800(a 0.5) for the printer. Each student has an RP of 100a for the same printer. For example, if a = 0.5, professionals have an RP of 800(0.50.5) =$0 for a printer with speed a = 0.5. Students have an RP of 100 0.5 =$50 for a printer with speed a = 0.5. The maximum printer speed corresponds to a = 1, whereas

a = 0 corresponds to a worthless printer.

There are one million professionals and one million students. It is equally costly to produce a printer at any level of a between 0 and 1 inclusive.

1. If Lexcorp chooses to make one kind of printer only at a speed of a = 0.2 what price should it set to maximize profit?[1 points]

Price =

Justification:

2. If Lexcorp chooses to make one kind of printer only, what speed should it pick and what price should it set to maximize profit?[2 points]

Price =

Speed =

Justification:

3. If Lexcorp chooses to offer multiple versions of the printer (that vary by speed), how many versions should it offer and what prices should it set to generate strictly more profit than achieved in part (2)?[4 points]

Price =

Speed =

Justification: