Bundle: Essentials Of Economics, 8th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
Bundle: Essentials Of Economics, 8th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337378833
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 14, Problem 7PA

Subpart (a):

To determine

The consumer surplus and effect of tax.

Subpart (b):

To determine

Calculate the consumer surplus.

Subpart (c):

To determine

Calculate profit.

Subpart (d):

To determine

The consumer surplus.

Subpart (e):

To determine

Favors of admission fee.

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Suppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.) a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods? b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle? c. Should this be legal?  
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