Explore BrainMass

Explore BrainMass

    Economics: Optimal pricing.

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    You are the manager of a firm that produces products X and Y at zero cost. You know that different types of consumers value your two products differently, but you are unable to identify these consumers individually at the time of the sale. In particular, you know there are three types of consumers (1,000 of each type) with the following valuations for the two products

    Consumer type Product X Product Y Bundle
    1 $60 $50 $110
    2 $40 $100 $140
    3 $25 $120 $145

    a) Find the prices that maximize profits if you sell the two products separately.
    b) Find the price of the bundle that maximizes profits, if you can only offer the two products together as a bundle.
    c) Find the optimal prices for the bundle and the two products separately, if you can offer a mixed bundle.
    d) Which of the above three strategies yields the highest profits?

    © BrainMass Inc. brainmass.com March 4, 2021, 10:29 pm ad1c9bdddf

    Solution Summary

    The problem set deals with evaluating different pricing strategies.