Asked by Rosalyn Fullington on Sep 24, 2024
Verified
Consumers demand different features from cough medications taken for daytime use versus nighttime use.Drug companies conveniently package both medications together.This strategy is designed to
A) Allow consumers to buy the two together
B) Stop consumers from buying each medicine separately
C) Make the consumers more homogenous so that maximum consumer surplus can be extracted with a single price
D) None of the above
Consumer Surplus
The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.
Package Together
The process of combining different products or services for sale as one combined offer.
- Recognize methods including "damaged goods," "metering," and "bundling" employed by companies to maximize earnings.
Verified Answer
AV
Aakash Verma3 days ago
Final Answer :
C
Explanation :
By packaging both medications together, drug companies can use a single price to extract maximum consumer surplus from the market. This strategy assumes that consumers value both medications equally and are willing to pay the same price for both, even though they have different features and uses. It also eliminates the option for consumers to buy only the medication they need, which could lead to a loss of sales for the drug company.
Learning Objectives
- Recognize methods including "damaged goods," "metering," and "bundling" employed by companies to maximize earnings.