Suppose there are 5 types of consumers: Type A, Type B. Type C. Type D, and Type E. There are 3,000 of each type. Two software products are sold by a monopolist: spreadsheets and word processing. Assume the marginal cost of production is $0. Consumer Type A B C D E Number 3,000 3,000 3,000 3,000 3,000 Spreadsheet 800 300 200 100 0 b. What is profit at this pricing policy? Willingness to Pay Word Processor Instructions: Round your answers to the nearest whole number. a. What will be the profit-maximizing bundle price? 0 100 200 300 800 Both 800 400 400 400 800 c. How will profit from this pricing policy compare to profit under independent pricing of the two goods? When pricing independently, the profit-maximizing price for spreadsheets is $ processing is $[ and the profit-maximizing price for word
Suppose there are 5 types of consumers: Type A, Type B. Type C. Type D, and Type E. There are 3,000 of each type. Two software products are sold by a monopolist: spreadsheets and word processing. Assume the marginal cost of production is $0. Consumer Type A B C D E Number 3,000 3,000 3,000 3,000 3,000 Spreadsheet 800 300 200 100 0 b. What is profit at this pricing policy? Willingness to Pay Word Processor Instructions: Round your answers to the nearest whole number. a. What will be the profit-maximizing bundle price? 0 100 200 300 800 Both 800 400 400 400 800 c. How will profit from this pricing policy compare to profit under independent pricing of the two goods? When pricing independently, the profit-maximizing price for spreadsheets is $ processing is $[ and the profit-maximizing price for word
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
Chapter14: Indirect Price Discrimination
Section: Chapter Questions
Problem 4MC
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Question
Transcribed Image Text:Suppose there are 5 types of consumers: Type A. Type B. Type C. Type D, and Type E. There are 3,000 of each type. Two software
products are sold by a monopolist: spreadsheets and word processing. Assume the marginal cost of production is $0.
Consumer Type
A
B
C
D
E
Number
3,000
3.000
3,000
3.000
3,000
Spreadsheet
800
300
200
100
0
b. What is profit at this pricing policy?
$
Willingness to Pay
Word Processor
Instructions: Round your answers to the nearest whole number.
a. What will be the profit-maximizing bundle price?
$
0
100
200
300
800
Both
800
400
400
400
800
c. How will profit from this pricing policy compare to profit under independent pricing of the two goods?
When pricing independently, the profit-maximizing price for spreadsheets is $
processing is $
d. What is profit under independent pricing?
$
and the profit-maximizing price for word
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