Assume an automobile manufacturer can sell its pickup truck with or without a to

Question

Assume an automobile manufacturer can sell its pickup truck with or without a towing package. Customer Group A is willing to pay a maximum of $30,000 for the truck and $1,100 for the towing package. Customer Group B is willing to pay $29,000 for the SUV and $1,000 for the towing package. Assuming the manufacturer cannot price discriminate but can bundle the products or sell them separate, which of the options below maximizes its revenues? Sell the components as a bundle for $30,500. Sell the components separately, charging $30,000 for the SUV and $1,000 for the towing package. Sell the components separately, charging $29,000 for the SUV and $1,100 for the towing package. Sell the components separately, charging $29,000 for the SUV and $1,000 for the towing package.

Explanation / Answer

Sell the components separately, charging $29,000 for the SUV and $1,100 for the towing packag

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