Your firm produces two products, the demands for which are independent. Both products are produced at zero marginal cost. You face four consumers (or groups of consumers) with the following reservation prices:

a. Consider three alternative pricing strategies: (i) selling the goods separately; (ii) pure bundling; (iii) mixed bundling. For each strategy, determine the optimal prices to be charged and the resulting profits. Which strategy would be best?
b. Now suppose that the production of each good entails a marginal cost of $30. How does this information change your answers to a? Why is the optimal strategy now different?

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Consumer Good 1 (S) 25 40 80 100 Good2 (S) 100 80 40 25