One form of price discrimination is bundling

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One form of price discrimination is bundling. Rather than make up a problem and require you to solve it, you make up a problem for me! Here are the rules:

i. Keep it simple: 3 consumers and 2 goods. The good has zero marginal cost of production and no fixed costs. The goods need not be real (i.e., you can use consumers “A” and “B” and goods “1” and “2”, or make up your own).

ii. Indicate the price the monopolist would charge for each individual good if it did not form a bundle, and the price it would choose for the bundle.

iii. Indicate the profit the firm makes from selling each good separately, as well as the profit made when selling a bundle instead.

iv. Please do not use the exact same values I used in class; that’s too easy.

v. Explain what you have done once you have done it.

Reference no: EM13999115

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