# The reservation prices (in dollars) of three classes of demanders (classes A, B, and C) for Ricky Parton's (a Latin country-western singer) compact disks are given in the table that follows:ClassCD 1CD 2А115ВС10It costs \$4 to produce and distribute each compact disk. The company can sell each CD separately, can put them together as a boxed set (that is, as a pure bundle), or can sell them in a mixed bundling format (offer the CDsboth separately and as a boxed set). Assume that each demander wants only one of each of the CDs at the reservation price (or at any lower price) and that there are an equal number of demanders in each class. Forsimplicity, assume that the only costs are those mentioned herea. What pricing method would you advise Ricky's company to use?b. How much better (profit-wise) is the best pricing method than the second most profitable pricing method?

Question
Asked Oct 20, 2019
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Step 1

The reservation price refers to the consumers who have set their reservation price as the highest price that they are willing to pay for goods and services.

Step 2

The reservation price for boxed set can be tabulated as follows.

Step 3
1. Selling boxed set priced at \$16, is the best pricing method. This method is suggested because, R can get more revenue from using t...

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