Question

Homework Ch 14) Athen there ar e two to the c ercano b etween the two Students with Early Classes Students without Early Classes Coffee The man and the a ct of bananas 20 The w on the progres 1. Mixed bunding Price bundle of coffee and a banana for 153, or just a coffee for 67 2. Price separately: Offer coffee at 57. price a banana 96 3. Bundle only: Coffee and a banana for 113. Do not offer goods separately. Assume that the price of an orbundene more you stopy, then the student will purchase them For simplicity me there is just one student with an early class, and one student with an early dass Revenue from Pricing Strategy Cost from Pricing Strategy Prore from Pricing Strategy 1. Mixed Bund 3. Bunda Pricing Strategy is the highest profit for the cate owner

Answer 1

Table

	With ( type 1)	without ( type 2)
Coffee	67	57
Banana	46	96
Total Willingness to Pay	113	153

	Revenue	cost	profit
Mixed	$ 220	$ 30	$ 190
Separate	$ 210	$ 30	$ 180
Bundling	$ 226	$ 50	$ 176

Mixed

Type 2 will buy bundle, type 1 will not, as for type 1, Maximum WTP for bundle = 113

Type 1 will buy only coffee at 67

So TR = 153+67 = 220

TC = 5+20+ 5 = 30

In separate pricing , type 1 will buy only coffee, as for banana,

Price is higher than WTP, which is 46

Type 2 will buy both

So TR = 57+57+96 = 210

TC = 5 + 5 + 20 = 30

bundling

As bundle price is 113, both will buy it

So TR = 2*113 = 226

Cost of bundle = 5+20 = 25

TC = 2*25 = 50

So highest profit , when strategy 1, mixed strategy

strategy 1