Bundling products makes sense for the seller when:
A) consumers have heterogeneous demands.
B) the products are complementary in nature.
C) firms cannot price discriminate.
D) both A and C.

Question

Quizplus · Accepted Answer

Bundling products is a good strategy for sellers when consumers have heterogeneous demands for different products. For example, some customers may want just one specific item while others may want a bundle with multiple items. This allows sellers to capture a larger share of the market. Additionally, bundling can help sellers overcome the problem of price discrimination, where customers with high willingness to pay are charged a higher price compared to customers with low willingness to pay. By offering a bundle at a fixed price, sellers can capture both segments of customers and maximize profits.

Bundling Products Makes Sense for the Seller When