A video store believes there are two equally sized consumer groups with different values for two DVDs as follows:
segment 1 values DVD A at $10 and DVD B at $8
Segment 2 values DVD A at $4 and DVD B at $12.
There are estimated to be 50 consumers in each group.The store currently has 100 of each DVD on hand.It paid $10 for each DVD.If it is unable to sell them all it can return them to the distributor for $4 each.To maximize profit contribution from the sale (or return)of these DVDs the store should:

Question

A video store believes there are two equally sized consumer groups with different values for two DVDs as follows: 
 segment 1 values DVD A at $10 and DVD B at $8
Segment 2 values DVD A at $4 and DVD B at $12.
There are estimated to be 50 consumers in each group.The store currently has 100 of each DVD on hand.It paid $10 for each DVD.If it is unable to sell them all it can return them to the distributor for $4 each.To maximize profit contribution from the sale (or return)of these DVDs the store should:

Quizplus · Accepted Answer

Offering A and B together for $16 maximizes profit because each segment values the bundle at $18, ensuring all DVDs are sold at a price above the return value, maximizing revenue.

A Video Store Believes There Are Two Equally Sized Consumer