The Venetian Resort in Las Vegas is considering a weekend resort package to European vacationers consisting of airfare and hotel room. The Venetian has identified three types of European vacationers who value airfare and hotel rooms differently. Suppose that the Venetian believes that there are 50 vacationers of each type. How much profit will the Venetian earn if it practices commodity bundling?
| Vacation Type | Airfare | Hotel |
| A | $1,000 | $1,000 |
| B | $1,400 | $1,100 |
| C | $2,000 | $800 |
A. $100,000
B. $150,000
C. $80,000
D. $120,000
E. $130,000
ANSWER :
given
The price of hotel = 800
The price of airfare = 1000
For type A if individually sold for 50 travellers cost would be = 800*50 + 1000*50 = 90,000
If sold in bundle for 50 travellers it would be = 1000*50 + 1000*50 = 100,000
Hence profit is 10,000
Similarly for type B individually it would be 90,000 and bundle would be 1400*50+1100*50 = 125,000. Hence profit will be 35,000
Similarly for type Ç bundle price would be 2000*50+800*50 = 140,000. Hence profit would be = 40,000
So the total profit = 80,000
So, the option "C" is third option is correct.
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