Why pricing policy from above would you recommend

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Reference no: EM1358008

Suppose three consumers A, B, and C have the following reservation prices for two goods X and Y:

Reservation Prices for Good X and Y

Good X Good Y

Consumer A 5.33 8.00
Consumer B 12.00 3.00
Consumer C 3.00 11.00

Both Good X and Good Y costs $4 per unit to produce.

a) You have been asked to recommend a pricing policy (to maximize profits) for the two goods X and Y. You are to consider pricing separately, pure bundling, and mixed bundling. Without computations, which pricing policy from above would you recommend? Please explain why?

b) For the pricing policy that you recommend above, please compute the optimal price and the firms profits. Confirm that the recommended pricing policy is indeed the best.

Reference no: EM1358008

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