Imagine that you are a gaming company with two hit mobile games, Candy Brush and Angry Cheese Curds (your marketing department is not good at coming up with names for your products). You are trying to decide how much to charge for each game..

You have determined that there are 3 potential consumers in your market, and they have the following valuations for each of your games.

	Candy Brush	Angry Cheese Curds
Consumer A	$13	$4
Consumer B	$0	$19
Consumer C	$6	$11

Your marginal cost of providing each game to each consumer is $1 (this is how much you have to kick back to the online retail store for each sale).

You need to decide whether to price the games separately or to sell them as a bundle only. To do so, you need to evaluate your profits under each scenario.

1. If you were to price each game separately, what would be the optimal price for each game? What would be your total profits of pricing separately? How much consumer surplus will there be in the market, and how much deadweight loss?

Candy Brush price - ___________________ Angry Cheese Curds price - ____________________

Firm Profits - _______________________ Consumer Surplus - ___________________

Deadweight loss - ____________________

2. If you were to instead sell only a bundle of the two games, what would be the optimal price for the bundle? What would be your total profits? How much consumer surplus would exist in the market and how much deadweight loss?

Price of bundle - _________________________ Firm Profits - __________________________

Consumer surplus - _________________________ Deadweight loss - _______________________

3. Why are profits from selling the bundle higher than profits from pricing separately here? (2 sentences maximum).