Suppose P = 20 ? 2Q is the market demand function for a local monopoly. The marg

Question

Suppose P = 20 ? 2Q is the market demand function for a local monopoly. The marginal cost is 2Q. The firm currently uses a standard pricing strategy. Which of the following will allow the firm to enhance the profits?

A

Engage in two-part pricing.

B

Engage in commodity bundling.

C

Engage in randomized pricing.

D

Engage in two-part pricing and engage in commodity bundling.

A

Engage in two-part pricing.

B

Engage in commodity bundling.

C

Engage in randomized pricing.

D

Engage in two-part pricing and engage in commodity bundling.

Explanation / Answer

Engage in two-part pricing and engage in commodity bundling.

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