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Assume the following: consumer 1 values a computer at $1000 and consumer 2 values the same...

Assume the following: consumer 1 values a computer at $1000 and consumer 2 values the same computer at $1200. Additionally, assume consumer 1 values a monitor at $500 while consumer 2 values the same monitor at $350. With this information, should the firm sell the computer and monitor separately or bundle?

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Answer #1

In case of separate sales, price of computer will be $1000 and price of monitor will be 350. If this is done then both consumers will purchase computer as well as monitor and total revenue will be 1000 x 2 plus 350 x 2 = 2700

In case of bundle the price of bundle will be 1500. This is because the combined willingness to pay by consumer 1 is 1000 + 500 = 1500 and the same by consumer 2 is 1200 + 350 = 1550. if the price of bundle is 1500 then both consumers will purchase and revenue will be $3000

Therefore the firm should sell them as a bundle and earn a greater revenue.

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