Question 2

Question 2 Cyberdyne Systems creates a Professional version of its machine learning software. By disabling some of the features in the Professional version it can create a Home version. Both versions have zero marginal cost. Cyberdyne Systems faces two customer segments which it cannot distinguish between and each is interested in buying at most one version. The RPS of each segments for each version are displayed below. Professional Version Segment Size Busmess 30 70 Each customer will choose the software that gives her the highest surplus. 1. If Cyberdyne Systems offers only the Professional version, what price should it charge in order to maximize revenue? 2. If it offers both versions, what prices should it set to maximize revenue? 3. Now suppose that Cyberdyne has a competitor who also sells a product, which is an alter native to Cyberdyne's. The Business customers have an RP of $10 for this product, while Home Buyers have an RP of $15. The competitor rm is selling its product for a price of $10 and will not change it regardless of Cyberdyne's actions. What prices should Cyberdyne set to maximize revenue? You may assume that customers will choose Cyberdyne's products if the surplus they get is exactly the same as the one they get by buying the competitor's product