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Question 1: Bundling Assume there are two segments (of equal size) whose maximum willingness to pay for the LED TV and for Surround sound system

Question 1: Bundling

Assume there are two segments (of equal size) whose maximum willingness to pay for the LED TV and for Surround sound system is given below:

LED TV Surround Sound System

Customer 1 $8,000 $4,000

Customer 2 $6,000 $5,000

(i)If the firm had to decide on a revenue maximizing price for the LED TV and for the surround sound system, what prices should it charge? What would be the revenue?

(ii)If the firm decides to bundle LED TV and Surround Sound system, what is the maximum revenues that the firm can achieve?

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