Question
Sunland Appliance Center is an experienced home appliance dealer. Sunland Appliance Center also offers a number of services for the home appliances that it sells.
Sunland Appliance Center is an experienced home appliance dealer. Sunland Appliance Center also offers a number of services for the home appliances that it sells. Assume that Sunland Appliance Center sells ovens on a standalone basis. Sunland Appliance Center also sells installation services and maintenance services for ovens. However, Sunland Appliance Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only $780 Oven with installation service 870 Oven with maintenance services 970 Oven with installation and maintenance services 990 In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $190. Additionally, the incremental amount charged by Sunland Appliance Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Sunland Appliance Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $780. Assume that a customer purchases an oven with both installation and maintenance services for $990.
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