Asked by Olivia Storm on Jul 07, 2024
Verified
Refer to Figure 11.5.1 above. The points on the figure represent the reservation prices of four different consumers. With mixed bundling:
A) consumers A and D pay $90 for a single good, and consumers B and C pay $120 for a bundle.
B) consumers A and D pay $90 for a bundle, and consumers B and C pay $120 for a single good.
C) consumers A and D pay $90 for a bundle, and consumers B and C pay $120 for a bundle.
D) consumers A and D pay $90 for a single good, and consumers B and C pay $120 for a single good.
Reservation Prices
The maximum price a consumer is willing to pay for a good or service, beyond which they will not purchase it.
Mixed Bundling
Selling two or more goods both as a package and individually.
- Comprehend the pricing strategies utilized by firms to optimize revenue through bundling and tying.
- Understand how reservation prices influence pricing strategies in bundling.
Verified Answer
SF
sianni faustJul 09, 2024
Final Answer :
A
Explanation :
Mixed bundling allows consumers to choose between purchasing items separately or as a bundle. Consumers A and D, with lower reservation prices, would likely opt for a single good at a lower price, while B and C, with higher reservation prices, might opt for a bundle at a higher price.
Learning Objectives
- Comprehend the pricing strategies utilized by firms to optimize revenue through bundling and tying.
- Understand how reservation prices influence pricing strategies in bundling.