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Assume PrettyYard, a company providing lawn services, can offer its services to customers at zero marginal cost. It knows that it faces two types of
- Assume PrettyYard, a company providing lawn services, can offer its services to customers at zero marginal cost. It knows that it faces two types of consumers in its market, but cannot distinguish between them before the point of sale. The following table shows each customer type's marginal willingness to pay for lawn cutting and fertilizing services.
Lawn Cutting
Fertilizing
Overall Appearance
$800
$400
Clean Lawn Lines
$1,000
$250
Lawn Cutting | Fertilizing | |
Overall Appearance | $800 | $400 |
Clean Lawn Lines | $1,000 | $250 |
- If lawn cutting and fertilizing services are sold separately, what would be the profit maximizing prices and what would total revenue be?
- Could PrettyYard increase its revenue by offering a pure bundle? If so, what would be the profit-maximizing price for the bundle? Explain.
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Introduction to Probability
Authors: Mark Daniel Ward, Ellen Gundlach
1st edition
716771098, 978-1319060893, 1319060897, 978-0716771098
