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2. You are a monopolist with 15 potential buyers for the two video games you sell, VG1 and VG2. You can produce each of
2. You are a monopolist with 15 potential buyers for the two video games you sell, VG1 and VG2. You can produce each of these games at constant marginal cost of $1. There are 3 different types of clients: type A (3 of them), type B (5 of them) and type C (7 of them). The types' willingness to pay for each of the games is given in the following table (each client would buy at most one unit of each of the games): Type A Type B Type C VG1 10 9 15 VG2 15 8 10 (a) If you can only set (linear) prices for each of the two games, what prices would you select? (b) You cannot do better with two-part tariffs (one for each game) in a case like this. Why? (c) Can you do better by selling ONLY the package with the two games? What would then be the price of the package (bundle) that you would set?
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