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Assume an Automobile Manufacturer Can Sell Its Sport Utility Vehicle

Question 36

Multiple Choice
Assume an automobile manufacturer can sell its sport utility vehicle (SUV)with or without a trailer towing package.One group of customers,group A,is willing to pay a maximum of $30,000 for the SUV and $1,100 for the towing package.A second group,B,is willing to pay $29,000 for the SUV and $1,000 for the towing package.Assuming the manufacturer cannot price discriminate,to maximize its revenues the manufacturer should:

Assume an automobile manufacturer can sell its sport utility vehicle (SUV) with or without a trailer towing package.One group of customers,group A,is willing to pay a maximum of $30,000 for the SUV and $1,100 for the towing package.A second group,B,is willing to pay $29,000 for the SUV and $1,000 for the towing package.Assuming the manufacturer cannot price discriminate,to maximize its revenues the manufacturer should:


A) sell the components separately, charging $30,000 for the SUV and $1,000 for the towing package.
B) sell the components separately, charging $29,000 for the SUV and $1,100 for the towing package.
C) sell the components separately, charging $29,000 for the SUV and $1,000 for the towing package.
D) sell the components as a bundle for $30,500.

Correct Answer:

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