Question
The Muncie Indiana Opera sells tickets to both classical and modern operas. It is staging two opera this year: Verdi's Aida and Porgy and Bess
The Muncie Indiana Opera sells tickets to both classical and modern operas. It is staging two opera this year: Verdi's Aida and Porgy and Bess by George Gershwin. Assume that all of the costs in the opera industry are the fixed costs of staging the opera. Assume that the marginal cost of another audience member is approximately zero. Consider the following information about the demand for opera in Muncie. There are three basic types of consumers, with 100 consumers in each group. This table shows that maximum that each type of consumer is willing to pay for each product:
Product | Group 1 consumers | Group 2 consumers | Group 3 consumers |
Aida | $50 | $12 | $35 |
Porgy and Bess | $25 | $8 | $40 |
As Business Manager for the Muncie Indiana Opera explain your optimal bundling and pricing strategy to maximize profits from the sale of opera tickets. Be sure to clearly explain why your strategy is optimal.
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