Return to the bundle pricing problem facing Crystal Channel, Inc. In parts a?c, suppose the manager now knows not only the demand price information in Table 14.1, but also knows how to identify subscribers as either family-oriented or adult-oriented viewers.a. What prices should Crystal Channel Inc. charge family-oriented viewers for each of the two channel packages separately to maximize total revenue and profit? What prices should adult-oriented viewers be charged? How much total revenue can be generated each month under this pricing plan?b. Explain why the prices in part a represent price discrimination and identify the type of price discrimination.c. Does the total revenue generated under price discrimination in part a exceed the total revenue from charging $125 for the bundle containing both family and adult channel packages? Explain why or why not.

Now suppose demand prices for family-oriented viewers remain the same ($100 for the family package and $50 for the adult package), but the demand prices for adult-oriented viewers are $125 for the family package and $150 for the adult package. In parts d?g, Crystal Channel cannot identify consumer types and thus cannot price discriminate.d. Are demand prices negatively correlated now? Explain why or why not.e. What separate prices should Crystal Channel charge for the family and adult channel packages? How much total revenue will be earned each month?f. What single price should Crystal Channel charge for the bundle containing both the family and adult channel packages? How much total revenue will be earned eachmonth?g. Compare the total revenues generated in parts e and f. Does bundling increase revenue? Why or why not?

Table 14.1

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Number of viewer type Family package only Adult package only Family and adult bundle Type of viewer 2,000 Family-oriented $100 $ 50 $150 2,000 Adult-oriented 25 100 125