You have recently been hired as the business manager for a small arthouse cinema in Japan. The cinema screens independent arthouse movies aswell as older independent movies. The rights to show these types of movies is negligible (assume the marginal cost equals zero). The business also has a loungethat serves drinks as well as small plates of food. The current business model is that the films are screened for free (movie tickets are free) and the business earns its revenue from sales in the lounge that occur before, during and after thescreening of the films. You have been hired to develop a new pricing strategy to improve profits Your first action was to commission an econometric study to estimate demand and demand characteristics. The study concluded there are two main types of customers having different demand. The study further concluded that the main observable characteristic between the two customer types is age. Note that ageis correlated with unobservable characteristics like income. The estimated demand for people over the age of 30 is: q° = 18-5p. The estimated demand for people under the age of 30 is: qu = 10-2p. Note that the food and drink sold in the lounge has been normalised and a price index has been computed. Therefore, the price, p, should be interpreted as theper unit price of a standarised item from the lounge including both drink and food. Quantity should be interpreted as the number of the standarised item demanded. Finally, you work on developing the business plan under the assumption that thebusiness has some market power. There are no other businesses offering your product and so you conduct your analysis assuming a monopoly market. The marginal cost per standarised item is $2. a. The first part of developing your business plan is to assess current practice given the estimated demands. The current pricing model is tocharge a single price per unit of standarised item. Compute this priceand profits. b. The second part of the plan is to consider adjusting the pricing strategy to consider the different demands. You still only charge a linear price perstandardised item but now offer different prices to each group of customers. Compute these prices and profits. Describe how you would implement this pricing strategy and comment on any difficulties that might arise. c. The final part of the plan is to rethink completely the pricing model. You investigate a pricing strategy that involves charging an entry fee (ticket tothe movie) as well as a price per standardised item from the lounge. Your job now is to come up with the optimal fixed charge and per unit price you would set. You should consider not only profitability but also discuss implementation concerns with the various pricing strategies that you consider. You are constructing a business so be sure to support you pricing design with evidence