Product Line Pricing In class, we studied product line pricing for substitute goods. Let's now consider the case of complementary goods. Consider a market with 2 types of customers for men's suits. There are 100 high value customers willing to pay (WTP) up to $375 for a suit. There are 100 low value customers willing to pay up to $250 for a suit. The marginal cost (wholesale price) of a suit is $150. 1. If the store only sells suits, what is the optimal price: $375 or $250? prots? 2. Now suppose that every customer that buys a suit is willing to pay up to $50 for a fancy shirt. If the customer does not buy a suit, their value of a fancy shirt is $0 (i.e., they don't buy a shirt alone). The marginal cost (wholesale price) of a shirt is $20. If the store sells suits and shirts, what are the optimal prices? prots? (i.e. come up with two price points - an optimal price for suits and an optimal price for shirts, along with the total prots) 3. Compare your answers to (l) and (2) and summarize the intuition. How does product line pricing with complements (as in this example) differ from product line pricing of substitutes