(a) If you can only set (linear) prices for each of the two games, what prices would you select? (b) Can you do better with two part tariffs? (c) Can you do better by selling ONLY the package with the two games? What would then be the price of the package (bundle) that you would set?
(a) If you can only set (linear) prices for each of the two games, what prices would you select? (b) Can you do better with two part tariffs? (c) Can you do better by selling ONLY the package with the two games? What would then be the price of the package (bundle) that you would set?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
You are a monopolist with 15 potential buyers for the two video games you sell, VG1 and VG2. You can produce each of these games at constant marginal cost of $1. There are 3 different types of clients: type A (3 of them), type B (5 of them) and type C (7 of them).
Transcribed Image Text:2.- You are a monopolist with 15 potential buyers for the two video games you sell, VG1
and VG2. You can produce each of these games at constant marginal cost of $1. There
are 3 different types of clients: type A (3 of them), type B (5 of them) and type C (7 of
them). The types' willingness to pay for each of the games is given in the following table
(each client would buy at most one unit of each of the games):
VG1
VG2
Туре А
10
15
Туре В
Туре С
14
10
(a) If you can only set (linear) prices for each of the two games, what prices would
you select?
(b) Can you do better with two part tariffs?
(c) Can you do better by selling ONLY the package with the two games? What
would then be the price of the package (bundle) that you would set?
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