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nave an equai number of three types of customers, and tnat these customers reservation prices are as IImustrated in the figure beiow. Bundle Laptop $850 $1,000 $600 Printer $100 $150 $50 $950 $1,150 $650 Customer A Customer B Customer C Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of p= 600 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is n= $ 2000. (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ 650. (Enter your response as a whole number.) In turn, profit is n= $ 1950 . (Enter your response as a whole number.) Why does bundling pay or not pay? Bundling pays because customer reservation values for laptops and printers in this example are negatively correlated.

nave an equai number of three types of customers, and tnat these customers reservation prices are as IImustrated in the figure beiow. Bundle Laptop $850 $1,000 $600 Printer $100 $150 $50 $950 $1,150 $650 Customer A Customer B Customer C Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of p= 600 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is n= $ 2000. (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ 650. (Enter your response as a whole number.) In turn, profit is n= $ 1950 . (Enter your response as a whole number.) Why does bundling pay or not pay? Bundling pays because customer reservation values for laptops and printers in this example are negatively correlated.

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.1IP
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nave an equai numper or tnree types or customers, ana tnat tnese customers reservation prices are as IImustratea in tne figure peiow. Printer Bundle Laptop $850 $1,000 $600 Customer A $100 $150 $50 $950 $1,150 $650 Customer B Customer C Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of p= 600 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is T= $ 2000|. (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ 650. (Enter your response as a whole number.) In turn, profit is T= $ 1950 . (Enter your response as a whole number.) Why does bundling pay or not pay? Bundling pays because customer reservation values for laptops and printers in this example are negatively correlated.
Transcribed Image Text:nave an equai numper or tnree types or customers, ana tnat tnese customers reservation prices are as IImustratea in tne figure peiow. Printer Bundle Laptop $850 $1,000 $600 Customer A $100 $150 $50 $950 $1,150 $650 Customer B Customer C Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of p= 600 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is T= $ 2000|. (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ 650. (Enter your response as a whole number.) In turn, profit is T= $ 1950 . (Enter your response as a whole number.) Why does bundling pay or not pay? Bundling pays because customer reservation values for laptops and printers in this example are negatively correlated.
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