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Scenario Bundling.1 :
Konon Company produces both digital cameras and photo printers. The marginal cost for a digital camera is 120 and the marginal cost for a photo printer is 80. There are four types of customers for Konon's digital camera and photo printers and their reservation prices are given in the table below.

Reservation
Prices

Camera

Printer

A

200

100

B

150

150

C

210

20

D

50

180
     


The possible pricing strategies are listed in the table below.

Prices

Camera

Printer

Bundle
(Camera + Printer)

Separated Prices

150

150

--

Pure Bundling

--

--

280

Mixed Bundling

200

150

300
       


You can assume each consumer only needs to buy 1 camera and 1 printer and they will purchase a product as long as the consumer surplus from purchasing the product is non-negative.

Refer to Scenario Bundling.1. Assuming there is only one customer of each type, what is the total producer surplus from pricing separately for Konon? We assume that if a consumer's willingness to pay equals the price, the consumer will purchase the product.

A. 150$

b. 350$

c. 120$

d. 230$

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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