Question
Consumer A's reservation price is $5 for a sandwich and $1 for a bowl of soup. Consumer B's reservation price for a sandwich is $4
Consumer A's reservation price is $5 for a sandwich and $1 for a bowl of soup. Consumer B's reservation price for a sandwich is $4 and $3 for a bowl of soup. Consumer C's reservation price is $1 for a sandwich and $5 for a bowl of soup. If the marginal cost of soup is $1.50 per bowl and the marginal cost of a sandwich is $2.50, which one among the following pricing strategies maximizes the restaurant's profits?
*correct answer is D. Please show your work on how to obtain the answer. Thank you.
a) $4 for a sandwich, $5 for a bowl of soup, $6 for a soup and a sandwich combo.
b) $6 for a soup and sandwich combo; no separate pricing. c) $4 for a sandwich, $3 for a bowl of soup, no combos. d) $5 for a sandwich, $5 for a bowl of soup, $7 for a combo.
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