Anand runs an airport coffee shop. He sells yogurt for $10 and granola for $3. Customers are only interested in buying one yogurt, one granola, or both. In a typical hour, he’ll have one person buying both the yogurt and granola, three people buying only the yogurt and three other people buying only the granola. He surveys his customers and finds that the people buying only the yogurt would buy granola if it cost only $2 and the people only buying the granola would buy the yogurt if it only cost$3. Should he start selling yogurt and granola together (in addition to selling them separately at the original prices) and, if so, what is the optimal price of the bundle?

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To solve this problem we need to analyze the demand and revenue for the different scenarios Given in... View the full answer