# You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of the other) who shop in your specialty clothing store. Consumers of type R will pay __B= \$80__ for a coat and __C= \$ 60__ for pants. Consumers of type S will pay __D= \$60__ for a coat and __E= \$ 75__ for pants. Your firm faces no competition and but it does pay for the clothing, __F=\$30__ per coat and __G= \$ 50__ per pair of pants, i.e. MCcoat = __F= \$30__ and MCpants= __G= \$ 50__. You can’t price discriminate. You offer the same prices to all your customers.Answer True or False and then show or explain how you reached your conclusion.: Profits in Part (B) with bundling are higher than in Part (A) of this problem.Answer: ________________

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You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of the other) who shop in your specialty clothing store. Consumers of type R will pay __B= \$80__ for a coat and __C= \$ 60__ for pants. Consumers of type S will pay __D= \$60__ for a coat and __E= \$ 75__ for pants. Your firm faces no competition and but it does pay for the clothing, __F=\$30__ per coat and __G= \$ 50__ per pair of pants, i.e. MCcoat = __F= \$30__ and MCpants= __G= \$ 50__. You can’t price discriminate. You offer the same prices to all your customers.

Answer True or False and then show or explain how you reached your conclusion.: Profits in Part (B) with bundling are higher than in Part (A) of this problem.

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Step 1

We are given:

Price for coat and a pair of pants for consumers of type R

Price for coat = \$80

Price of a pair of pants= \$60

Price for coat and a pair of pants for consumers of type S.

Price for coat = \$60

Price of...

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