Question
The Dell computer company has two customers, Aleisha and Maria, for its desktop computers and monitors. The average total cost and the marginal cost
The Dell computer company has two customers, Aleisha and Maria, for its desktop computers and monitors. The average total cost and the marginal cost of a desktop computer are equal and constant at $200. That is, the total cost of producing one computer is $200, and the total cost of producing two computers is $400 (2 x $200). Similarly, the average total cost and the marginal cost of a monitor are equal and constant at $100. The total cost of producing one monitor is $100, and the total cost of producing two monitors is $200 (2 x $100). The table presents the maximum amounts that Aleisha and Maria are willing to pay for one Dell desktop computer and for one Dell monitor. It can also be assumed that Dell will set its prices to maximize profits. Given these simplifying assumptions, calculate the total surplus if Dell does not bundle together the desktop computer and the monitor. Then compute the total surplus if Dell does bundle together the desktop computer and the monitor in one combined package. Product Aleisha's Maximum Willingness to Pay for 1 Item Maria's Maximum Willingness to Pay for 1 Item Desktop Computer $941 $400 Monitor $202 $486 Suppose Dell does not bundle together its computer and monitor. It sets separate prices for computers and monitors that result in maximum combined profits without bundling. What is the total surplus without bundling? (Round the answer to the nearest whole dollar.)
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