What is the best price per bundle

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Reference no: EM131248975

High-profit bundling:-

Show that bundling two items can sometimes increase producer surplus by up to 50 percent as compared to no bundling. (Extreme bundling) Suppose that a vendor sells articles for which all potential customers have willingness-to-pay of either $0 or $10, each with probability 1/2.

The customers' valuations of a particular article are independent. The vendor's marginal cost of an article is zero. What is the best price per bundle and associated profit if the articles are sold in bundles of 2?

Reference no: EM131248975

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