Suppose that there are four consumers who value two goods: (1) monthly gym membership and (2) monthly unlimited fitness classes in the following way: Consumer Value for Gym $20 $80 $90 $120 1 2 3 4 Value for fitness classes $120 $80 $60 $30 (a) What prices maximize the revenue for gym memberships and classes when not sold as part of a bundle? (b) What is the revenue maximizing price for a bundle of both A and B? (c) Can you find a mixed bundle that increases revenue relative to the bundle in part (b)?

Suppose that there are four consumers who value two goods: (1) monthly gym membership and (2) monthly unlimited fitness classes in the following way: Consumer Value for Gym $20 $80 $90 $120 1 2 3 4 Value for fitness classes $120 $80 $60 $30 (a) What prices maximize the revenue for gym memberships and classes when not sold as part of a bundle? (b) What is the revenue maximizing price for a bundle of both A and B? (c) Can you find a mixed bundle that increases revenue relative to the bundle in part (b)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that there are four consumers who value two goods: (1) monthly gym membership and (2)
monthly unlimited fitness classes in the following way:
Consumer
Value for Gym
$20
$80
$90
$120
1
2
3
4
Value for fitness classes
$120
$80
$60
$30
(a) What prices maximize the revenue for gym memberships and classes when not sold as part of a
bundle?
(b) What is the revenue maximizing price for a bundle of both A and B?
(c) Can you find a mixed bundle that increases revenue relative to the bundle in part (b)?

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