Question

Table: Maximum Willingness

Question 10 0 out of 10 points Table: Maximum Willingness to Pay for Word and Excel Amanda Yvonne Word $110 $60 Excel $40 $100 Office (Word Excel) $150 $160 Reference: Ref 14-7 Table: Maximum Willingness to Pay for Word and Excel) Refer to the table. If Microsoft sells each product, Word and Excel, individualy, what is the maximum profit Microsoft can make from selling the two products? (Assume the marginal costs of production are zero.) Selected Answer A S210 Answers: A. S210 B. $220 C. SI0 D. S160 Question 11 0 out of 10 points Table: Maximum Willingness to Pay for Word and Excel Amanda Yvonne Word $60 S110 $100 Excel $40 Office (Word Excel) $150 $160 Raference: Ref 14-7 (Table: Maximum Willingness to Pay far Ward and Excel) Refer to the table. If Microsoft bundles Word and Excel and sells them as Office, what is the maximum profit Micrasoft can make from selling Office? (Assume the marginal costs of production are zero.) Selected Answer: B. $320 Answers A. $210 B. $320 C. $300 D.$160

Answer 1

Q10.

B. 220

Explanation

Here two person has different abilities to pay.

Profit from selling word=60*2=$120

Profit from selling excel =$100*1=$100

So total profit from selling both individually =120+100=$320.

If we sell the word at $110 we can sell only one and able to make $110.but if we sell at 60 we can sell it to both so we can earn 60*2=120.

If we sell excel at 100 than we will get only 100 and if we sell excel at 40 we can sell it to both and able to earn $80 only. So we will sell only one unit at $100.

Q11.

C. 300

Explanation :

If we sell it in bundle then we will get $300.

If we sell at $160 than only yvone will buy so firm can earn only $160. But if firm sells it at $150 it can sell it to both and can able to earn $300.