Question: Consider a local fast-food restaurant. The following table shows the maximum price that Alex and Anna will pay for the two products: chicken nuggets

Consider a local fast-food restaurant. The following table shows the maximum price

Consider a local fast-food restaurant. The following table shows the maximum price that Alex and Anna will pay for the two products: chicken nuggets and fries. Maximum Price Alex Anna Chicken Nuggets $1.50 $2.50 Fries $2.00 $1.00 Bundled Price $3.50 $3.50 The cost of chicken nuggets is $1.00 and the cost of fries is $0.50. a) What are the profit-maximizing prices and the profit under single-item pricing? b) What are the profits under pure bundling? c) Can the restaurant obtain higher profits by allowing mixed bundling? Explain.

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