Question

1. Your firm produces two products where marginal cost of production for each product is equal to $30. The following table shows the reservation prices (minimum price consumers willing to pay) of different types of consumers for each of your product.

consumer type	product 1	product 2
A	25	100
B	40	80
C	80	40
D	100	25

Consider three alternative pricing strategies (i) only selling the goods individually (ii) only bundling and (iii) providing both as a package and individually. For each strategy, determine the optimal prices to be charged and the resulting profits.

Answer 1