What is the likely effect of this strategy on profits and consumer surplus compared to charging only a single price? a. Quantity increases, profits increases, welfare increases. b. Quantity increases, profits increases, welfare decreases. c. Quantity decreases, profits increases, welfare decreases. d. Quantity decreases, profits decreases, welfare decreases. e. None of the other answers is correct.

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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.