Question

How does mixed bundling differ from pure​ bundling? Under what conditions is mixed bundling preferable to pure​ bundling?  

A.

With mixed bundling the firm offers various bundles. Mixed bundling is preferable when goods are only slightly negatively correlated and or marginal costs are significant.  

B.

With mixed bundling the goods must be sold as a bundle. Mixed bundling is preferable when goods are only slightly negatively correlated and or marginal costs are significant.  

C.

With mixed bundling the firm offers various bundles. Mixed bundling is preferable when goods are only slightly positively correlated and or marginal costs are significant.  

D.

With mixed bundling the goods can be sold separately or as a bundle. Mixed bundling is preferable when goods are only slightly positively correlated and or marginal costs are significant.  

E.

With mixed bundling the goods can be sold separately or as a bundle. Mixed bundling is preferable when goods are only slightly negatively correlated and or marginal costs are significant.  

Why do many restaurants practice mixed bundling​ (by offering a complete dinner as well as an​ à la carte​ menu) instead of pure​ bundling?

To maximize​ profits, restaurants​ can:

A.

charge high prices for individual items to capture consumer surplus from those consumers who value some items more highly than​ others, while offering complete dinners at a higher bundled price to retain those customers who have greater variation in their reservation prices for different dishes.

B.

charge low prices for individual items to capture consumer surplus from those consumers who value some items more highly than​ others, while offering complete dinners at a lower bundled price to retain those customers who have lower variation in their reservation prices for different dishes.

C.

charge low prices for individual items to capture consumer surplus from those consumers who value some items more highly than​ others, while offering complete dinners at a higher bundled price to retain those customers who have greater variation in their reservation prices for different dishes.

D.

charge high prices for individual items to capture consumer surplus from those consumers who value some items more highly than​ others, while offering complete dinners at a lower bundled price to retain those customers who have greater variation in their reservation prices for different dishes.

E.

charge high prices for individual items to capture consumer surplus from those consumers who value some items more highly than​ others, while offering complete dinners at a lower bundled price to retain those customers who have lower variation in their reservation prices for different dishes.

Answer 1

1) Pure bundling is the selling of products only as a package. While mixed bundling permits the customer to purchase the goods or products either separately or together.

E. With mixed bundling, the goods can be sold separately or as a bundle. mixed bundling is preferable when goods are only slightly negatively correlated and or when marginal cost is significant.

2) E. Charge high prices for the individual item to capture consumer surplus from those consumers who value some items more highly than others, while offering complete dinners at lower bundled price to retain those customers who have lower variation in their reservation prices for different dishes.

By charging less for a bundled complete dinner it permits them to capture consumer surplus from dinners from those who attach moderate values for all kind of dishes.