Problem 4. (Bundling) Consider a case where there are three consumers with respective valuations for products X and Y as given in the table. Both products X and Y are produced by the same monopolist. Product X Product Y Consumer 1 4 Consumer 2 3 Consumer 3 4 a) What is the best that the monopolist can do if the products are sold separately? b) Consider the case of pure bundling in which the monopolist sells one unit of each good in a package for a single price. What is the best that the monopolist can do in this case? c) Now consider the case of mixed bundling in which the monopolist sells one unit of each good in a package for a single price but also offers the products separately. What is the best that the monopolist can do in this case? d) Finally, consider the same setup except that the valuations of consumer 2 are 5 for both goods, not 3. what is the best that the monopolist can do in case it sells the products separately, under pure bundling and mired bundling?

Problem 4. (Bundling) Consider a case where there are three consumers with respective valuations for products X and Y as given in the table. Both products X and Y are produced by the same monopolist. Product X Product Y Consumer 1 4 Consumer 2 3 Consumer 3 4 a) What is the best that the monopolist can do if the products are sold separately? b) Consider the case of pure bundling in which the monopolist sells one unit of each good in a package for a single price. What is the best that the monopolist can do in this case? c) Now consider the case of mixed bundling in which the monopolist sells one unit of each good in a package for a single price but also offers the products separately. What is the best that the monopolist can do in this case? d) Finally, consider the same setup except that the valuations of consumer 2 are 5 for both goods, not 3. what is the best that the monopolist can do in case it sells the products separately, under pure bundling and mired bundling?

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 7PA

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