A firm offers two products for sale. The marginal cost of one product is new zero once the first unit has been produced. The marginal cost of the other product rises as output rises. What would be the effect of bundling the two products? What price would the firm charge for the bundle?
Answer to relevant QuestionsAmazon.com and Apple have recently agreed to sell ebooks for $9.99. Do you think this price reflects marginal cost? Is it too high or too low? Explain.What is the creditor-owner conflict? Explain why 100 percent equity might be inefficient. Explain why 100 percent debt might be inefficient.You have been hired as a consultant to create a market-based economy in a nation that has never before experienced markets. Explain how you would do that.In measuring economic profit:(a) How do you deal with a one-time event? (b) How do you deal with money provided by relatives to get the business started?(c) How do you handle off-balance sheet expenses, that is, expenses ...It is often stated that free cash flow is the same as economic profit. Define free cash flow. Demonstrate whether it is or is not the same as economic profit.
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