Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $52. Each of the high-value consumers buys one doll and two accessories and is willing to pay $101 in total.

Mattel is currently considering two pricing strategies:

Strategy 1: Sell each doll for $26 and each accessory for $26

Strategy 2: Sell each doll for $3 and each accessory for $49

In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy.

Revenue from Low-Value Revenue from High-value Total Revenue from

Customers Customers Strategy

$52 Value, 1 Accessory $101 Value, 2 Accessories ($)

($) ($)

Strategy 1 $? $? $?

$26 doll + $26

accessory

Strategy 2

$3 doll + $49

accessory $? $? $?

The strategy that generates the most revenue is strategy

A. 2

B. 1