What is the revenue under this price strategy

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Reference no: EM131094704

A university has determined that its students fall into two categories when it comes to room and board demand. University planners call these two types Sleepers and Eaters. The reservation prices for a dormitory room and the basic meal plan of the two types are as follows:

Sleepers Eaters

Dorm Room $5,500 $3,000

Meal Plan $2,500 $6,000

(a) Currently, the university offers students the option of selecting just the dorm room at $3,000, just the meal plan at $2,500, or both for a total price of $5,500. What is the revenue under this price strategy?

(b) An economic consultant advises the university to stop offering the two goods separately and, instead, to sell them only as a single, combined room and board package. Explain the consultant’s strategy. What price the university should set for the combined product? What is the revenue under this price strategy?

Reference no: EM131094704

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