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

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!