There is a coffee shop selling coffee and bagels. There are three types of consumers. Type A’s WTP (willingness to pay) for coffee is 5, and WTP for bagel is 0. Type B’s WTP for coffee is 0, and WTP for bagel is 5. Type C’s WTP for coffee is 4, and WTP for bagel is 4. Assume there are as many A types as B and C types. The coffee shop is trying to maximize revenue. Which statement is correct?

(a) It should sell the coffee and bagel only as a bundle together at a price of 5.

(b) It should sell the coffee and bagel separately each at a price of 4.

(c) It should sell the coffee and bagel separately each at a price of 4 and also as a bundle at 5.

(d) It should sell the coffee and bagel separately each at a price of 5 and also as a bundle at 8.

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The detailed answer for the above question is provided below The correct statement is c It should se... View the full answer