Question: You have developed a software program that has three different potential configurations: basic, deluxe, and premium. There are two potential types of buyers for your
You have developed a software program that has three different potential configurations: basic,
deluxe, and premium. There are two potential types of buyers for your product: home users
and small business users. The following table is the result of market research on the (total)
valuations of the two buyer types for the different versions.
Version Home users Small business users
Basic 10 18
Deluxe 15 30
Premium 18 37
Note that the table above shows total willingness to pay, not marginal willingness to pay.
All your costs are sunk, so your profit is equal to your revenue.
What pricing scheme maximizes total surplus (consumer plus producer surplus)?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
