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The cost function to Amazon is 6(0),ng = 5,090 + 1000;; + SOD- a. How do the sales of the Prime accounts affect the demand
The cost function to Amazon is 6(0),ng = 5,090 + 1000;; + SOD- a. How do the sales of the Prime accounts affect the demand for the downloads? In your explanation, state whether the downloads are a substitute for, or a complement of, the accounts? b. Find the prot-maximizing price and sales of both the accounts and the downloads. Also, find Amazon's optimal prot. Use marginal revenue and marginal cost to explain how you derived your answer. (Note: the prices mayr be unrealistic.) c. Now suppose Amazon sells the account, but does not offer the downloaded movies (i.e., Q\" = (I). Find the prot-maximizing sales and price of the account. Draw a graph with marginal revenue and marginal cost to explain your answer. d. lCompare the account price in part b to the account price in part c. Explain why Amazon would change its price for the accounts should Amazon eliminate its movie download offers? 4. Mnlti-prodnot monopoly Amazon Prime sells a TV subscription service and for added fees movie downloads. The (inverse) demand function for the Prime account is P)! = 300 20A and the (inverse) demand motion for the downloads is PD = 200 _ QB + Q' Note: In this problem, Amazon sells all of movie downloads at the same price
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