(13 points) Bill Barriers, CEO of MightySoft software, is contemplating a new marketing strategy: bundling their best-selling word-processor and their spreadsheet together and selling the pair of software products for one price. Suppose that MightySoft sells the word-processor for $200 and the spreadsheet for $250. A marketing survey of 100 people who purchased either of these packages in the last year turned up the following facts:

4. (13 points) Bill Barriers, CEO of Mighty Soft software, is contemplating a new marketing strategy: bundling their best-selling word-processor and their spreadsheet together and selling the pair of software products for one price. Suppose that Mighty Soft sells the word-processor for $200 and the spreadsheet for $250. A marketing survey of 100 people who purchased either of these packages in the last year turned up the following facts: 120 people bought both. 2 40 people bought only the word-processor. They would be willing to spend up to $120 more for the spreadsheet. 3 40 people bought only the spreadsheet. They would be willing to spend up to $100 more for the word-processor. In answering the following questions you may assume the following: New purchasers of Mighty Soft products will have the same characteristics as this group. 2 There is zero marginal cost to producing extra copies of either software package. 3 There is a zero marginal cost to creating a bundle. a) Let us assume that Mighty Soft also offers the products separately as well as bundles. In order to determine how to price the bundle, Bill Barriers asks himself the following questions. In order to sell the bundle to the word-processor purchasers, what would be the maximum price of the bundle? b) In order to sell the bundle to the spreadsheet users, what would be the maximum price of the bundle? c) What would MightySoft's profits be on a group of 100 users if it priced the bundle at $320? d) What would MightSoft's profits be on a group of 100 users if it priced the bundle at $350