Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Question

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Answer 1

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

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Refer to Example 10.3 - 'Markup Pricing: Supermarkets to Designer Jeans' a. Why do small convenience stores which are often open 24-7 typically charge higher prices than supermarkets? b. Why are designer label jeans typically more expensive than 'mass-market' jeans?

Suppose there exists a costless way to charge drivers on the freeway. Under this costless system, tolls on the freeway would be adjusted according to traffic conditions. For example, when traffic is usually heavy, as it is from 6:30 a.m. to 9:00 a.m. on a weekday, the toll to drive on the freeway would be higher than when traffic is light. In other words, freeway tolls would be used to equate the demand for freeway space with its supply. Would you be in favor of such a system to replace our current (largely zero price) system? Explain your answer.

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Answer 2

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Answer 6

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Answer 7

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Answer 8

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.