### Pricing Strategy for a Computer Hardware FirmA computer hardware firm sells both laptop computers and printers. Using focus groups, their pricing team has determined that they have an equal number of three types of customers, and these customers' reservation prices are summarized in the table below:| | **Laptop** | **Printer** | **Bundle** ||---------|------------|-------------|------------|| Customer A | $750 | $100 | $850 || Customer B | $950 | $50 | $1,000 || Customer C | $650 | $150 | $800 |**Assumptions:**- The marginal cost of production for laptops and printers is zero.- There is only one customer of each type.**Individual Pricing Strategy:**To determine optimal pricing using individual prices, the firm seeks to maximize profit by setting prices for laptops and printers individually.- **Laptop Price:** $650- **Printer Price:** $100With these prices, the firm's profit totals $2,150.**Bundle Pricing Strategy:**After conducting a detailed study, a consultant suggests that bundling laptops and printers together could yield more profit rather than selling them separately. Assuming again one customer of each type and zero marginal cost, the firm needs to determine the profit-maximizing bundle price.- **Profit-maximizing Bundle Price:** [Blank for response]The firm must evaluate if this strategy indeed provides higher profits compared to individual sales.**Conclusion:**The practice of bundling versus individual item pricing is a strategic decision that involves understanding consumer reservation prices and optimizing profit through the right pricing model.

The firm will be able to sell their product if the reservation price of the consumer is above their…

To maximize profit using individual prices, the firm should charge a price for laptops of p = 650 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is =$ 2150 (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers togethe as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ (Enter your response as a whole number.)

To maximize profit using individual prices, the firm should charge a price for laptops of p = 650 and a price for printers of p= 100 (Enter your responses as whole numbers.) In turn, profit is =$ 2150 (Enter your response as a whole number.) After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold laptops and printers togethe as a bundle instead of separately. Is the consultant right? Assume again that the firm has one customer of each type and that marginal cost is zero. How much does the firm earn in total from pure bundling? The profit-maximizing pure bundle price is $ (Enter your response as a whole number.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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