Question

Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants. The firm selling suits faces no competition and has a marginal cost of zero. The optimal commodity bundling strategy is:

Answer 1

Answer:

Charge $150 for a suit

Explanation:

Bundling strategy is the pricing of goods by a business despite different customers having different preferential prices they are willing to pay for the good.

In this scenario Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants.

The two customers are willing to pay $150 for both the jacket and the pants.

So the best decision for the company is to sell a suit made up of the jacket and pants for $150.

This way bother customers will get their preferred price.