Suppose that there are four consumers who value two goods: (1) monthly gym membership and (2) monthly unlimited fitness classes in the following way: Consumer Value for Gym $20 $80 $90 $120 1 2 3 4 Value for fitness classes $120 $80 $60 $30 (a) What prices maximize the revenue for gym memberships and classes when not sold as part of a bundle? (b) What is the revenue maximizing price for a bundle of both A and B? (c) Can you find a mixed bundle that increases revenue relative to the bundle in part (b)?

Suppose that there are four consumers who value two goods: (1) monthly gym membership and (2) monthly unlimited fitness classes in the following way: Consumer Value for Gym $20 $80 $90 $120 1 2 3 4 Value for fitness classes $120 $80 $60 $30 (a) What prices maximize the revenue for gym memberships and classes when not sold as part of a bundle? (b) What is the revenue maximizing price for a bundle of both A and B? (c) Can you find a mixed bundle that increases revenue relative to the bundle in part (b)?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.4P

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How does a consumer maximizes their utility given that they experience a budget constraint? Explain with graphical illustrations. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
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