Question: A ready to eat cereal manufacturer faces two types of consumers adults

A ready-to-eat cereal manufacturer faces two types of consumers, adults and children, having the following schedule of gross surpluses for each additional unit of cereal consumed.

Cereal costs $0.15 per ounce to produce. The manufacturer has full information about types because adults hate sweet children's cereal and children hate the fiber-filled adult cereal. What is the optimal bundle to offer adults and two children in this full-informationsetting?
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  • CreatedFebruary 25, 2014
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