Staples Center is considering its pricing problem for two upcoming concerts: Lady Gaga and Rolling Stones. Consumers may buy tickets for either one or both of the concerts. Ticketmasters typical customers are buyers like Jack, Jill, Mike and Lucy who have the following maximum willingness-to-pay for watching Lady Gaga and Rolling Stones perform:

	Lady Gaga	Rolling Stones
Jack	$240	$65
Jill	$220	$140
Mike	$140	$220
Lucy	$50	$250

(a) Calculate Staples Centers optimal prices if it were selling tickets for the Lady Gaga concert and Rolling Stones concert independently.

(b) Now suppose Staples Center plans to offer the two tickets as ONLY a bundle. What will be the optimum price of the bundle? Compare Staples Centers profit from offering the bundle vs. its total profit from offering the concerts independently.

(c) Next, suppose Staples Center offers consumers the option to buy a bundle of both tickets or each ticket individually. What will be the optimal prices of the bundle ticket, ticket for the Lady Gaga concert and ticket for the Rolling Stones concert? Compare the profit from this scheme to the profit levels you obtained in (b) and (c) and explain why you see the profit differences across these three schemes.

(d) Staples Center has another pair of concerts coming up later in the year: U2 and Norah Jones. Suppose the consumers have a different set of maximum willingness-to-pay for the two concerts given below:

	U2	Norah Jones
Jack	$250	$200
Jill	$200	$150
Mike	$140	$100
Lucy	$50	$90

(e) Calculate the optimum price of the bundle in this case. Compare Staples Centers profit from offering a bundle vs. its total profit from offering the concerts independently. Explain how the correlation across valuations of the consumers matters for your answers in (d) and (b).