6. Individual Problems 14-6 At a student cafe, there are equal numbers of two types of customers with the following values. The cafe owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (e, she cannot price-discriminate). Students with Early Classes 73 Students without Early Classes Coffee 63 Banana 55 105 The marginal cost of coffee is 10 and the marginal cost of a banana is 40. The cafe owner is considering three prioing strategies: 1. Mixed bundling: Price bundle of coffee and a banana for 168, or just a coffee for 73. 2. Price separately: Offer coffee at 63, price a banana at 105 3. Bundle only: Coffee and a banana for 128. Do not offer goods separately. Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle For simplicity, assume there is just one student with an early dass, and one student without an early dass Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle For simploty, assume there is just one student with an early dass, and one student without an early class, Revenue from Pricing Strategy Cost from Pricing Strategy Profit from Pricing Strategy Price Strategy 1. Mixed Bunding 2. Price Separately 3. Bundle Only S s 5 s S Pricing strategy yields the highest profit for the cafe owner Grade It Now Save & Continue Continue without saving