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t a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two ypes of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). Coffee Banana Students with Early Classes Students without Early Classes 67 46 57 96 he marginal cost of coffee is 5 and the marginal cost of a banana is 20. he café owner is considering three pricing strategies: 1. Mixed bundling: Price bundle of coffee and a banana for 153, or just a coffee for 67. 2. Price separately: Offer coffee at 57, price a banana at 96. 3. Bundle only: Coffee and a banana for 113. Do not offer goods separately. ssume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item r bundle. or simplicity, assume there is just one student with an early class, and one student without an early class.

t a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two ypes of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). Coffee Banana Students with Early Classes Students without Early Classes 67 46 57 96 he marginal cost of coffee is 5 and the marginal cost of a banana is 20. he café owner is considering three pricing strategies: 1. Mixed bundling: Price bundle of coffee and a banana for 153, or just a coffee for 67. 2. Price separately: Offer coffee at 57, price a banana at 96. 3. Bundle only: Coffee and a banana for 113. Do not offer goods separately. ssume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item r bundle. or simplicity, assume there is just one student with an early class, and one student without an early class.

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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At a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). Coffee Banana Students with Early Classes Students without Early Classes 67 46 57 96 The marginal cost of coffee is 5 and the marginal cost of a banana is 20. The café owner is considering three pricing strategies: 1. Mixed bundling: Price bundle of coffee and a banana for 153, or just a coffee for 67. 2. Price separately: Offer coffee at 57, price a banana at 96. 3. Bundle only: Coffee and a banana for 113. Do not offer goods separately. Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. For simplicity, assume there is just one student with an early class, and one student without an early class.
Transcribed Image Text:At a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). Coffee Banana Students with Early Classes Students without Early Classes 67 46 57 96 The marginal cost of coffee is 5 and the marginal cost of a banana is 20. The café owner is considering three pricing strategies: 1. Mixed bundling: Price bundle of coffee and a banana for 153, or just a coffee for 67. 2. Price separately: Offer coffee at 57, price a banana at 96. 3. Bundle only: Coffee and a banana for 113. Do not offer goods separately. Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. For simplicity, assume there is just one student with an early class, and one student without an early class.
Price Strategy 1. Mixed Bundling 2. Price Separately 3. Bundle Only Pricing strategy Revenue from Pricing Strategy Cost from Pricing Strategy Profit from Pricing Strategy $ $ yields the highest profit for the café owner. $ $ $ $ $ $
Transcribed Image Text:Price Strategy 1. Mixed Bundling 2. Price Separately 3. Bundle Only Pricing strategy Revenue from Pricing Strategy Cost from Pricing Strategy Profit from Pricing Strategy $ $ yields the highest profit for the café owner. $ $ $ $ $ $
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