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A firm produces two products, the demands for which are independent. Each of the products has zero marginal cost. The rm faces four consumers with
A firm produces two products, the demands for which are independent. Each of the products has zero marginal cost. The rm faces four consumers with the following reservation prices: (a) First, calculate the profitmaximizing prices and the resulting prot if goods are sold separately. Next, suppose the rm can use pure bundling (i.e., it only sells the products only as a bundle, and does not sell the products separately). Calculate the prot-maximizing price of the bundle and the resulting profit. (a) Analyze whether or not the rm can maximize its prot by using mixed bundling. If so, what is the prot-maximizing pricing strategy? If not, briey explain why
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