The following graph shows the daily market for wine when a tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $5.80 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool (? Market for Wine 50 I Quantity (Bottles of wine) 50 45 Demand Price (Dollars per bottle) Supply Price (Dollars per bottle) 40 75.00 17.00 Supply 35 30 Supply Shifter 25 Tax on Sellers (Dollars per bottle) 0.00 20 Demand 15 10 50 100 180 200 250 200 350 400 480 500 QUANTITY (Bottles of wine) Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Bottles of wine) (Dollars per bottle) (Dollars per bottle) Before Tax After Tax Using the data from the previous table, the tax burden that falls on buyers is $ and the tax burden of sellers is $ The burden of the tax falls more heavily on the v elastic side of the market. PRICE (Dolars per bottle)

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Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.