Microeconomics Course: ECO 303

A computer hardware rm sells both laptop computers and printers. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers' reservation prices are as illustrated in the gure below. Laptop Printer Bundle Customer A $800 $100 $900 Customer B $950 $150 $1.100 Customer C $600 $50 $650 Assume for simplicity the marginal cost of production for laptops and printers is zero. If the rm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize prot? Assuming for simplicity that the rm has only one customers of each type, how much does it earn in total? To maximize prot using individual prices, the rm should charge a price for laptops of and a price for printers of (Enter your responses as whole numbers.) In turn. prot is I = $ (Enferyour response as a whole number.) After conducting a costy study. an outside consultant claims that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right'? Assume again that the rm has one customer of each type and that marginal cost is zero. How much does the rm earn in total from pure bundling? The protmaximizing pure bundle price is $ . (Enter your response as a whole number ) In turn. prot is I = $ . (Enter your response as a whole number.) Why does bundling pay or not pay? Bundling Y because customer reservation values for laptops and printers in this example are T correlated