n every Friday.
1. Use Market Basket Analysis (Support, Confidence, and LiM) to compare two cases.
o Case 1: Consumer who bought potato chips also bought milk Case 2: Consumer who bought
soda also bought milk
o What does the result in a) imply? Please interpret the results in a).
2. Based on the results in a), suggest a strategy which the store owner could implement to increase sales of
milk.
Question 2: (10 pts.)
You are selling a soMware product called “Link” which is available in high- and low-quality versions
called Link Professional and Link Home respec8vely. You have 2 units of Link Professional and 2 units of
Link Home.
There are 2 poten8al customers, each of whom is interested in buying 1 unit of Link (either Link
Professional or Home but not both). Suppose that your objec8ve is to maximize the total revenue from
selling the soMware. Further, you do not know the iden8ty of either buyer and you must sell by pos8ng
one price for Link Professional and another price for Link Home. Each buyer seeks to maximize her
consumer surplus and may buy Link Professional or Link Home or neither depending on the prices that
you post. Please show all intermediate steps and clearly explain your reasoning.
1. What is the op8mal price and resul8ng revenue under the following scenario? What (if anything) would
each customer buy?
2. If you could iden8fy each buyer and make targeted offers, what price would you offer to each and how
much revenue would you earn? What (if anything) would each customer buy?
Scenario The willingness to pay (WTP) of the 2 poten8al buyers is:
Question 3: (10 pts.)
Read part of 2013 Macworld ar8cle about Appstore below to answer the following ques8ons:
1. Does Appstore provide a two-sided placorm.? If yes, are there the same side and cross-side
network effects? Please
2. Does Appstore operate in a market that exhibits “winner take all” dynamics?
The App Store turns five: A look back andforward
By Lex Friedman Jul 8, 2013
Five years ago, the App Store was born. A million apps, billions of dollars, and an uncountably high number of Angry Birds
later, the store is unques8onably a smashing, unrivaled success. These days, customers download more than 800 apps every
single second.
When the iPhone launched in 2007, Steve Jobs famously told developers that they could write “apps” for the device by
crea8ng Web apps. Developers mostly scoffed at that pronouncement
—some went so far as to jailbreak their phones just so they could play around with crea8ng soMware for the revolu8onary
new device.
Respite came in March 2008, when Apple laid out the roadmap for iOS development—including a soMware development kit
(SDK) for programmers to write their own apps—and announced that it would provide a storefront through which
developers could sell their soMware.
The App Store launched on July 10, 2008, with a whopping 552 apps on its virtual shelves; the most common prices were $1
and $10, and there were a mere 135 free apps.
In the intervening years, the App Store has made some developers fabulously wealthy; gave some a new, stable career; and
leM others with broken dreams and disappointments. But owners of iOS devices didn’t focus on the App Store lonery—they
simply cheered the many awesome new abili8es their devices gained.
This is the story of the App Store’s success; it’s a success that has come in the face of plenty of issues with the store, many of
which persist even to today. But more on that in a bit.
Not so humble beginnings
Among those 552 launch apps were many that s8ll grace our home screens: MLB.com At Bat, Facebook, Yelp, Shazam, and
Super Monkey Ball, to name a few. The App Store launched simultaneously in 62 countries; then, as now, it was accessible
from a devoted iOS app, or as a feature sort of crammed into iTunes.
The App Store’s first weekend saw more than 10 million app downloads. Less than a month later, Sega’s Super Monkey Ball
hit 300,000 downloads, neong Sega $3 million and Apple more than $1 million of its own, thanks to the store’s 70/30
revenue split.
By September, the store had surpassed 100 million downloads, and when the end of 2008 rolled around, the most
downloaded app of the year, with 5 million downloads, was Facebook. Of course, since that par8cular app was (and
remains) free of charge, those downloads didn’t translate directly into dollars for Facebook or Apple. But as the App Store’s
fortunes rose, so too did the iPhone’s, and later the iPad’s. And Facebook’s mobile usage went through the roof.
This is a part of the ar8cle on MacWorld. You may read full ar8cle on The App Store turns five: A look back and forward.