So to maximize profit, you want to make sure that your customers buy as many concessions as possible. You decide a bundling scheme is a good option to explore. You currently charge $6 for popcorn and $3 for candy. Market research reports show that customers who buy popcorn tend to also buy a drink. However, customers who buy popcorn tend not to buy candy and vice versa. People buy one or the other, but not both. Your plan, then, is to bundle popcorn and candy together at a discounted price to try to change the consumer behavior from buying one or the other to buying both. The question, as usual, is what price to charge to maximize demand as well as profit. Based on price discrimination and peak-load pricing, you can expect an average of 3,220 moviegoers a month. Suppose these customers are split into four groups, as follows: Group P: only buys popcorn (750 visits) Group C: only buys candy (750 visits) Group PC: buys both (420 visits) Group N: buys neither (1,300 visits) You consider offering a bundle of 1 popcorn + 1 candy for $7.00. The marginal cost of candy is $0.50, and the marginal cost of popcorn is $1.00. Calculate the following bundling scenarios to figure out if you should employ this pricing scheme or not.

So to maximize profit, you want to make sure that your customers buy as many concessions as possible. You decide a bundling scheme is a good option to explore. You currently charge $6 for popcorn and $3 for candy. Market research reports show that customers who buy popcorn tend to also buy a drink. However, customers who buy popcorn tend not to buy candy and vice versa. People buy one or the other, but not both. Your plan, then, is to bundle popcorn and candy together at a discounted price to try to change the consumer behavior from buying one or the other to buying both. The question, as usual, is what price to charge to maximize demand as well as profit. Based on price discrimination and peak-load pricing, you can expect an average of 3,220 moviegoers a month. Suppose these customers are split into four groups, as follows: Group P: only buys popcorn (750 visits) Group C: only buys candy (750 visits) Group PC: buys both (420 visits) Group N: buys neither (1,300 visits) You consider offering a bundle of 1 popcorn + 1 candy for $7.00. The marginal cost of candy is $0.50, and the marginal cost of popcorn is $1.00. Calculate the following bundling scenarios to figure out if you should employ this pricing scheme or not.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.8P

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