You own a company that designs and makes onesies for babies. You essentially have three different...

 

Transcribed Image Text:

You own a company that designs and makes onesies for babies. You essentially have three different types of designs for any theme and color scheme: first there are your standard floral prints that grandparents love; then there are the ones with cute animals; lastly, there are ones with silly sayings that crazy aunties like to get their nieces and nephews. The market has three types of consumers - grandparents, parents, and crazy aunties - and there are equal amounts of each in the market. You must decide on a pricing strategy for your onesies. Each consumer will purchase at most 1 of each type of onesie. The consumers' valuations of the goods are listed in the following table. Assume for this problem that the costs of production are zero. Consumer Valuations Consumer Types Grandparents Silly Sayings $5 $6 $12 Floral Animals $6 $7 $3 Parents $3 Crazy Aunties $10 a) What are the optimal (separate) prices for floral, animal, and silly sayings onesies? b) What is the optimal bundle price if you decide to sell your onesies in groups of three - each group containing a floral onesie, a onesie with cute little animals on it, and onesie with a silly saying? Did bundling increase your profits? Explain. You own a company that designs and makes onesies for babies. You essentially have three different types of designs for any theme and color scheme: first there are your standard floral prints that grandparents love; then there are the ones with cute animals; lastly, there are ones with silly sayings that crazy aunties like to get their nieces and nephews. The market has three types of consumers - grandparents, parents, and crazy aunties - and there are equal amounts of each in the market. You must decide on a pricing strategy for your onesies. Each consumer will purchase at most 1 of each type of onesie. The consumers' valuations of the goods are listed in the following table. Assume for this problem that the costs of production are zero. Consumer Valuations Consumer Types Grandparents Silly Sayings $5 $6 $12 Floral Animals $6 $7 $3 Parents $3 Crazy Aunties $10 a) What are the optimal (separate) prices for floral, animal, and silly sayings onesies? b) What is the optimal bundle price if you decide to sell your onesies in groups of three - each group containing a floral onesie, a onesie with cute little animals on it, and onesie with a silly saying? Did bundling increase your profits? Explain.

Answer rating: 100% (QA)

If the price of onesies will floral design is 10 then only crazy aunties will buy as the rest have v... View the full answer