nave an equai numper or tnree types or customers, ana tnat tnese customers reservation prices are as IImustratea in tne figure peiow.PrinterBundleLaptop$850$1,000$600Customer A$100$150$50$950$1,150$650Customer BCustomer CAssume 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 ofp= 600and a price for printers ofp= 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 andprinters together as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and thatmarginal 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 paysbecause customer reservation values for laptops and printers in this example are negatively correlated.

When companies tend to package numerous services or products together as a single unit being…

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.

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 2SCQ: Classify the following as a government-enforced barrier to entry, a banker to entry that is not...