Bob and ron''s stereo sells televisions and dvd players

Reference no: EM13898069

Bob and Ron's Stereo sells televisions and DVD players. They have estimated the demand for these items and have determined that there are three consumer types (A, B, and C) of equal number (assume one for simplicity) that have the following reservation prices for the two products. Bob and Ron's cost for a TV is 9 and for a DVD player is 9. It will cost Bob and Ron 18 to produce a bundle of one TV and one DVD player.

	TV	DVD Player
A	28	12
B	29	4
C	30	10

Any consumer's reservation price for a bundle of one TV and one DVD player is the sum of their reservation prices for each item. Consumers will demand (at most) one TV and one DVD player

a) If Bob and Ron only consider pricing each item separately, pricing a pure bundle, or pricing a mixed bundle as their pricing policy, what price(s) would maximize their profit and what would be their profit?

b) If Bob and Ron were able to perfectly price discriminate (that is, charge different prices to different consumers), how much would their profit increase over their optimal profit in part a?

Reference no: EM13898069

Questions Cloud

How can anthropology be used within a business setting : After reading "Conflict and Confluence in Advertising Meetings by Robert J. Morais- How can anthropology be used within a business setting?

How did the colonies interact differently with the american : How did the colonies interact differently with the American Indians?

Bob and ron''s stereo sells televisions and dvd players : Bob and Ron's Stereo sells televisions and DVD players. They have estimated the demand for these items and have determined that there are three consumer types (A, B, and C) of equal number (assume one for simplicity)

Describe current state of affairs with diversity training : There were a couple of readings this week specific to diversity training. How would you describe the current state of affairs with diversity training and what advice (grounded in empirical evidence) would you give to organizations struggling with ..

Unintended consequences of using indentured servants : Unintended consequences of using indentured servants

What are the roles and impact of politics : What are the roles and impact of politics, law, and economics in global within China compared to the United States. How would a global business person need to adjust his or her mindset and ways of doing business to successfully expand to China.

Identify and discuss the different ways that the civil war : Identify and discuss the different ways that the Civil War

User Account

All Pages