Question
You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is
You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is expected that in 2021 there will be some return to more normal travel. You will re-launch your advertising for 2021 announcing that customers will be able to do both for one price. Your marginal cost per customer is $4800.
Customer Preferences
Cruise | Casino | |
Customer1 | $7,000 | $3,000 |
Customer2 | $2,000 | $6,000 |
Given the preferences, would bundlingimprove profits over the high-cost strategy? Support your conclusion by showing if (by how much) profits differ under each strategy, bundle versushigh price.
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