5. Suppose you are a manager of a firm that produces products X, Y and Z. You kn

Question

5. Suppose you are a manager of a firm that produces products X, Y and Z. You know that there are two different types of consumers, type 1 and type 2, who value your products differently. You also know that there 10,000 type1 consumers and 50,000 type 2 consumers with the following valuations for the three products:

Consumer Type Product X Product Y Product Z

1 $250 $150 $100

2 $200 $75 $250

(a) If you price each product separately (i.e., using a standard pricing strategy), what prices should you charge to maximize revenues and what are the revenues?

(b) If you adopt a first-degree price discrimination policy, what prices should you charge to maximize revenues and what are the revenues?

(c) If you use a commodity-bundle strategy such that the products are sold as one item (i.e., you market product X, product Y, and product Z together), what price should you charge to maximize revenues and what are the revenues?

Explanation / Answer

where you got 26.25 and 5 million from ?

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