GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--forsimplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce abundle consisting of both packages.The following are the consumer reservation prices for each package:WheelsConsumerInteriorA1124В3512С1828A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate

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Asked Oct 20, 2019
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GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--for
simplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a
bundle consisting of both packages.
The following are the consumer reservation prices for each package:
Wheels
Consumer
Interior
A
11
24
В
35
12
С
18
28
A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate
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GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--for simplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a bundle consisting of both packages. The following are the consumer reservation prices for each package: Wheels Consumer Interior A 11 24 В 35 12 С 18 28 A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate

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Expert Answer

Step 1

Given:  GeeM costs 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a bundle consisting of both packages.

Total cost if each consumer buys 1 unit of each package (3 is the number of consumers) = 5*1*3 + 10*1*3 + 15 *1*3 = $90

Step 2

The following table shows the consumer reservation price (that is the highest price consumer is willing to spend for the product):

Wheels (W)
Interior (I
Bundle (W+I)
Consumers
А
11
24
35
В
35
12
47
C
18
28
46
Minimum Price
11
12
35
co
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Wheels (W) Interior (I Bundle (W+I) Consumers А 11 24 35 В 35 12 47 C 18 28 46 Minimum Price 11 12 35 co

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Step 3

Here the row minimum price shows the minimum price out of the three consumers that they are willing to pay. It is mentioned that G...

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