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Q-12 Vber, a ride sharing service, matches riders with drivers interested in traveling between Kanpur and Lucknow. Vber posts a price per one-way ride. Riders

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Q-12 Vber, a ride sharing service, matches riders with drivers interested in traveling between Kanpur and Lucknow. Vber posts a price per one-way ride. Riders and Drivers observe the price and send a message to Vber if they are willing to either pay that much for a ride or accept that much (less a commission) to provide a ride. Vber used to charge a 10% commission. For example, if Vber posts a price of 50, a rider who accepts will pay 50 for a ride and the driver ferrying them will receive 0.9x50=45. Vber knows the demand curve for rides, its D(p) = 100(1 - p), wherep is the per ride price. Potential drivers will only sign up if what they receives exceeds their opportunity cost of doing something else as well as the marginal cost of ferrying someone one-way between the two cities. Vber has determined that if drivers are offered w per ride, 100w drivers will volunteer to provide rides. Vber is committed to ensuring that any rider willing to pay the posted price will be matched with a driver. However, not every driver who announces they are willing to provide a ride will be matched with a ride. Now suppose that this year Vber has a new manager in charge, Vivek. Vivek decides to set the commission rate to be equal to zero. What price would Vivek post if he wanted to maximize the surplus of riders? (You are also given the information that the lowest profit that Vber can sustain is zero, that is Vber cannot be paying out of their own pocket)

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