(Table: Maximum Willingness to Pay III) The marginal cost of a one-night stay and one round of golf are $50 and $10, respectively. Which of the following statements is (are) TRUE? I. If a firm is using a pure bundling strategy, the bundle price should be set at $230 to maximize producer surplus.
II) Suppose a firm uses the following mixed bundling strategy: the bundle price is $240, or the price for a one-night stay is $180 and the price per round of golf is $80. With this strategy, producer surplus is $380.
III) If a firm prices each item separately such that the price for a one-night stay is $100 and the price per round of golf is $50, producer surplus will be $270.
A) I, II, and III
B) II and III
C) I and III
D) I

Question

(Table: Maximum Willingness to Pay III) The marginal cost of a one-night stay and one round of golf are $50 and $10, respectively. Which of the following statements is (are) TRUE?  I. If a firm is using a pure bundling strategy, the bundle price should be set at $230 to maximize producer surplus.
II) Suppose a firm uses the following mixed bundling strategy: the bundle price is $240, or the price for a one-night stay is $180 and the price per round of golf is $80. With this strategy, producer surplus is $380.
III) If a firm prices each item separately such that the price for a one-night stay is $100 and the price per round of golf is $50, producer surplus will be $270.
A) I, II, and III 
B) II and III 
C) I and III 
D) I

Quizplus · Accepted Answer

The Answer of (Table: Maximum Willingness to Pay III) The marginal cost of a one-night stay and one round of golf are $50 and $10, respectively. Which of the following statements is (are) TRUE?  I. If a firm is using a pure bundling strategy, the bundle price should be set at $230 to maximize producer surplus.
II) Suppose a firm uses the following mixed bundling strategy: the bundle price is $240, or the price for a one-night stay is $180 and the price per round of golf is $80. With this strategy, producer surplus is $380.
III) If a firm prices each item separately such that the price for a one-night stay is $100 and the price per round of golf is $50, producer surplus will be $270.
A) I, II, and III 
B) II and III 
C) I and III 
D) I

(Table: Maximum Willingness to Pay III) the Marginal Cost of a One-Night