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What is the optimal mixed bundling strategy

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Reference no: EM133079237

You produce Internet Explorer (IE) and Edge. You have two customers, Customer A and Customer B. The willingness to pay for each item for each customer appears below.

Customer A Customer B

IE $8 $14

Edge $23 $14

In parts A, B, and C below, assume Marginal Cost (MC) is zero for both Internet Explorer and Edge.

A) If you sell Internet Explorer and Edge separately, what price for each maximizes your profit? What is your total profit?

B) If you bundle Internet Explorer and Edge together, what bundle price maximizes your profit? What is your profit?

C) What is the optimal mixed bundling strategy? Is there an advantage to mixed bundling in this example? Why or why not?

Now assume your MC has increased from zero to 10 for each unit of Internet Explorer and each unit of Edge. Repeat parts A, B, and C with this change in costs.

Reference no: EM133079237

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