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Suppose there are 5 types of consumers: Type A. Type B. Type C. Type D. and Type E. There are 3,000 of each type. Two
Suppose there are 5 types of consumers: Type A. Type B. Type C. Type D. and Type E. There are 3,000 of each type. Two software products are sold by a monopolist: spreadsheets and word processing. Assume the marginal cost of producing each program is $30. Willingness to Pay Consumer Type Number Spreadsheet Word Processor Both A 3.000 200 0 200 B 3,000 70 30 100 C 3,000 50 50 100 D 3.000 30 70 100 E 3,000 0 200 200 Instructions: Round your answers to the nearest whole number. a. What will be the profit-maximizing bundle price? 100 b. What is profit under this pricing policy? $ 6 c. How will profit from this pricing policy compare to profit under independent pricing of the two goods? When pricing independently, the profit-maximizing price for spreadsheets is $ and the profit-maximizing price for word processing is $ d. What is profit under independent pricing? $ e. Now consider the possibility of offering a bundle and selling the two programs separately. Can you find prices for the bundle and the two individual products that will yield a greater profit than selling either the bundle alone or the individual products alone
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