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A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package. (20 points) A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. Product Z Product X Product Y Type 1 Consumer $10 $10 Type 2 Consumer $5 $10 Marginal cost $2 $3 $60 $100 $40 The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De- termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package.

A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package. (20 points) A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. Product Z Product X Product Y Type 1 Consumer $10 $10 Type 2 Consumer $5 $10 Marginal cost $2 $3 $60 $100 $40 The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De- termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package. (20 points) A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. Product Z Product X Product Y Type 1 Consumer $10 $10 Type 2 Consumer $5 $10 Marginal cost $2 $3 $60 $100 $40 The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De- termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package.
Transcribed Image Text:A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package. (20 points) A firm that sells three products X, Y, and Z faces three types of consumers. The consumers' willingness to pay for the products and the marginal cost of providing each product are summarized in the following table. Product Z Product X Product Y Type 1 Consumer $10 $10 Type 2 Consumer $5 $10 Marginal cost $2 $3 $60 $100 $40 The number of type 1 and type 2 consumers are 70 and 30 respectively. a. If a firm is to offer separate prices for each product, what prices should it set? Compute the profits of the firm if the three products are sold separately. b. Suppose now the firm sells the three products in one package. De- termine the profit maximizing price of the package. Also compute the corresponding profit level. c. Based on your answers in part a. and b., conclude whether the firm should sell the three items separately or tie them in a package.
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