Question

The table below displays Andy Reid and Bill Belichick's willingness to pay for tickets to watch the Super Bowl, Pro Bowl, and their combined willingness to pay for both tickets. If the NFL sells each ticket individually, the maximum profit the NFL can make from selling the two tickets is dollars. (Assume the marginal costs of production are zero). However, if the NFL were to bundle the two tickets into one package, the bundle would be priced at dollars resulting in a total profit of dollars. (3 pts.) Andy Bill Super Bowl Pro Bowl Ticket Package $13 $16

Answer 1

Individual selling

For super bowl: P = 11, then only Andy will buy

So π = 11

If P = 6, then both will buy, so π = 2*6 = 12

So Charge P = 12,

.

for pro bowl: P = 4, both buy , π = 2*4 = 8

P = 10 , only Bill will buy, π = 10

So Charge P = 10

Total π = 12+ 10 = 22 dollars

.

Bundling

If Bundle Price = 15,

Both will buy, π = 2*15 = 30

If Bundle price = 16

Only Bill will buy , π = 16

So bundle will be priced at 15 dollars ,

Resulting in profit of 30 dollars