The Dell computer company has two customers, Aleisha and Maria, for its desktop computers and monitors. The average total cost and the marginal cost of a desktop computer are equal and constant at $200. That is, the total cost of producing one computer is $200, and the total cost of producing two computers is $400 (2 × $200). Similarly, the average total cost and the marginal cost of a monitor are equal and constant at $100. The total cost of producing one monitor is $100, and the total cost of producing two monitors is $200 (2 × $100). The table presents the maximum amounts that Aleisha and Maria are willing to pay for one Dell desktop computer and for one Dell monitor. It can also be assumed that Dell will set its prices to maximize profits. Given these simplifying assumptions, calculate the total surplus if Dell does not bundle together the desktop computer and the monitor. Then compute the total surplus if Dell does bundle together the desktop computer and the monitor in one combined package. Product Desktop Computer Monitor Aleisha's Maximum Willingness to pay for 1 Item $913 $202 Maria's Maximum Willingness to pay for 1 Item $400 $412 Suppose Dell does not bundle together its computer and monitor. It sets separate prices for computers and monitors that result in maximum combined profits without bundling. What is the total surplus without bundling? (Round the answer to the nearest whole dollar.)
The Dell computer company has two customers, Aleisha and Maria, for its desktop computers and monitors. The average total cost and the marginal cost of a desktop computer are equal and constant at $200. That is, the total cost of producing one computer is $200, and the total cost of producing two computers is $400 (2 × $200). Similarly, the average total cost and the marginal cost of a monitor are equal and constant at $100. The total cost of producing one monitor is $100, and the total cost of producing two monitors is $200 (2 × $100). The table presents the maximum amounts that Aleisha and Maria are willing to pay for one Dell desktop computer and for one Dell monitor. It can also be assumed that Dell will set its prices to maximize profits. Given these simplifying assumptions, calculate the total surplus if Dell does not bundle together the desktop computer and the monitor. Then compute the total surplus if Dell does bundle together the desktop computer and the monitor in one combined package. Product Desktop Computer Monitor Aleisha's Maximum Willingness to pay for 1 Item $913 $202 Maria's Maximum Willingness to pay for 1 Item $400 $412 Suppose Dell does not bundle together its computer and monitor. It sets separate prices for computers and monitors that result in maximum combined profits without bundling. What is the total surplus without bundling? (Round the answer to the nearest whole dollar.)
Chapter22: Supply: The Costs Of Doing Business
Section: Chapter Questions
Problem 14E
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Transcribed Image Text:Suppose Dell does not bundle together its computer and monitor. It sets separate prices for computers and monitors that result in
maximum combined profits without bundling. What is the total surplus without bundling? (Round the answer to the nearest
whole dollar.)
surplus: $
1109
Now suppose that Dell does bundle together its computer and monitor in one package. It sets a price for this package that results
in maximum profits with bundling. What is the total surplus with bundling? (Round the answer to the nearest whole dollar.)
surplus: $
1101
Transcribed Image Text:The Dell computer company has two customers, Aleisha and Maria, for its desktop computers and monitors. The average total
cost and the marginal cost of a desktop computer are equal and constant at $200. That is, the total cost of producing one
computer is $200, and the total cost of producing two computers is $400 (2 x $200). Similarly, the average total cost and the
marginal cost of a monitor are equal and constant at $100. The total cost of producing one monitor is $100, and the total cost of
producing two monitors is $200 (2 × $100).
The table presents the maximum amounts that Aleisha and Maria are willing to pay for one Dell desktop computer and for one
Dell monitor. It can also be assumed that Dell will set its prices to maximize profits.
Given these simplifying assumptions, calculate the total surplus if Dell does not bundle together the desktop computer and the
monitor. Then compute the total surplus if Dell does bundle together the desktop computer and the monitor in one
combined package.
Product
Desktop
Computer
Monitor
Aleisha's Maximum
Willingness to Pay for 1 Item
$913
$202
Maria's Maximum Willingness
to Pay for 1 Item
$400
$412
Suppose Dell does not bundle together its computer and monitor. It sets separate prices for computers and monitors that result in
maximum combined profits without bundling. What is the total surplus without bundling? (Round the answer to the nearest
whole dollar.)
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