Mixed bundling is more profitable than pure bundling when:
A) the marginal cost of each good being sold is positive.
B) the consumers' reservation values of each good being sold are not perfectly negatively correlated with one or another.
C) the marginal cost of one good is zero.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

Mixed bundling allows firms to cater to a wider range of consumer preferences and capture more consumer surplus by offering both bundles and individual products. This strategy is more profitable when the marginal cost of each good is positive (A) and when consumers' reservation values for the goods are not perfectly negatively correlated (B), as it allows for price discrimination and maximizes sales across different consumer segments.

Mixed Bundling Is More Profitable Than Pure Bundling When