A local insurance company offers both home and auto insurance to four types of customers with the reservation prices listed in the figure below. Assume for simplicity that there is onlyone consumer of each type.HomeAutoBundleCustomer A$90$67$157Customer BCustomer CCustomer D$117$87$204$103$77$180$83$52$135If the firm were to sell home and auto insurance separately, it would charge $83 for home insurance, $52 for auto insurance, and earn a combined revenue of $540.Determine the revenue the firm would receive if it used a pure bundle. Comparing the revenue of the pure bundle to the revenue of selling home and auto insurance separately, we can conclude that thereservation prices of the consumers must:O A. have no correlationB. be positively correlatedC. be negatively correlatedD. be serially correlated

Bundling is defined as the method of clubbing two goods together, it gives the consumers an option…

A local insurance company offers both home and auto insurance to four types of customers with the reservation prices listed in the figure below. Assume for simplicity that there is only one consumer of each type.

A local insurance company offers both home and auto insurance to four types of customers with the reservation prices listed in the figure below. Assume for simplicity that there is only one consumer of each type.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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