Kcable is a cable company and has a local monopoly in cable TV (good 1) and fiber Internet (good 2). Assume that the marginal cost of producing either good is zero. There are 1000 customers. The reservation price for the Internet is Ri and the reservation price for the cable is Rc where Ri ∈ [0,50] and Rc ∈ [0,10]. Customers are uniformly distributed. Suppose the goods are offered separately. Compute the monopoly prices for good 1 and good 2. Now assume that both goods are offered only as a bundle, but not separately. Compute the profit-maximizing bundle price. Let the two goods be offered separately at prices you have found in (a), and also as a bundle at price you have found in (b). Determine the monopolist's profit. Is there a more profitable way (more profitable than part c) to bundle the goods?
Kcable is a cable company and has a local
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Suppose the goods are offered separately. Compute the monopoly prices for good 1 and good 2.
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Now assume that both goods are offered only as a bundle, but not separately. Compute the profit-maximizing bundle price.
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Let the two goods be offered separately at prices you have found in (a), and also as a bundle at price you have found in (b). Determine the monopolist's profit.
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Is there a more profitable way (more profitable than part c) to bundle the goods?
It's a question that needs to be solved with numbers. Please give numbered answers. PLEASE DO NOT COPY PASTE THE ESSAY ANSWERS THOSE ARE INCORRECT. YOU SHOULD SOLVE WITH NUMBERS.
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