Practice Questions: Part 2 1. Horn is an internet backbone and service provider. Its fixed costs of maintaining its networks are $1,000,000 per period. Streamhorn is a news and information streaming service that is owed by Horn. Streamhorn has 10,000 potential customers each of whom has an identical individual demand for their service given by p. =20g, where q_ is hours of streamed content per period. Horn-can set two fees: an internet access fee (f) per Streamhorn customer and a termination fee (t) per Streamhorn customer, charged to Streamhorn. a) If Horn is unrestricted, what fees will it set and what price will Streamhorn set to maximize the profits of the integrated firm? (Hint: What individual consumer:surplus is created by the price Streamhorn charges?) b) If Horn is prevented from charging a termination fee to Streamhorn because of net neutrality rules, will this change the decisions made in part (a), if so how? c) Now suppose that Streamhorn becomes an independent company (not owned by Horn). Will this change the effect of having or not having net neutrality rules