This report considers the profit‐maximising price strategy of a firm, Games Inc, that is selling an application for a phone or tablet for which it owns the copyright (that is, it is a monopolist) in every country in the world. Throughout the question you can assume that each consumer wants at most one copy of the application. The requirements of the report are given below, but your report should address each specific question in turn. a. First assume that Games Inc sells their product in two countries, Australia and the US, and that the company knows the exact willingness to pay for the application for each customer. What is the profit‐maximising pricing strategy for the company? What conditions are required for this pricing strategy to be implementable? Make sure you provide clear economic reasoning for your answer. b. Now assume that every consumer within a country has the same valuation for the product, but consumers differ between countries in terms of their valuations. What pricing strategy would you now recommend? Again, what conditions are required for this pricing strategy to be implementable? Make sure you provide intuition for your recommendation. c. Now just focus on the market in Australia (for the purposes of this part of the question, you can ignore the US market). Assume that there are two types of consumer in Australia who differ in their price sensitivity. The firm knows the characteristics of each type of consumer, but does not know the identity of any given consumer. What pricing strategy should Games Inc adopt? Are there any tactics that Games Inc can use to improve the School of Economics BUSS1040 Essay 2 profitability of this pricing strategy? Are there ever any situations in which a monopolist will charge a price equal or less than marginal cost for its product? Discuss this in the context of price discrimination. Make sure you provide economic arguments to justify your answer.