Question

An opera house is offering three performances and has two types of consumers. The performances are "Carmen," "Madama Butterfly," and "Eugene Onegin." Consumer 1 has WTP of $100 for a ticket to "Carmen," $200 for "Madama Butterfly," and $70 for "Eugene Onegin." Consumer 2 has WTP of $120 for "Carmen," $100 for "Madama Butterfly," and $150 for "Eugene Onegin." Each ticket costs the opera house at $40. How should the opera house bundle the goods?

Answer 1

Answer: Bundle all the three operas together

Explanation:

Customers purchase a good only if its price is less than the customer’s reservation price.

Total WTP of consumer 1 = 100 + 200 + 70 = 370

Total WTP of consumer 2 = 120 + 100 + 150 = 370

Hence, all the three operas should be bundled together.