Question: 5) I need some help with the following question, the class is Economics. The topics is in pricing strategies. Suppose the on-campus coffee shop caters
5) I need some help with the following question, the class is Economics. The topics is in pricing strategies.

Suppose the on-campus coffee shop caters to two different groups of students: those with 8:00 am classes and those who are stumbling home after a late night out where they passed out at the frat house. There are about equal numbers of two types of students, and they have the following valuations (in cents). Coffee shop management cannot distinguish between the two types of students because to them they all look the same tired, disheveled, wearing someone else's sweatshirt in other words, it's impossible to price discriminate. Students with Hungover 8:00 am classes zombies Coffee 70 60 Banana 50 100 The MC of coffee is 10. The MC of a banana is 40. Is bundling more protable than selling separately? (Hint: if you sell the bundle, can you make more by offering coffee separately?) If so, what price should be charged for the bundle
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
