(Table: Willingness to Pay II) Assume that the marginal cost of a computer is $500 and the marginal cost of a monitor is $200. Suppose that a mixed bundling strategy sets the price for a computer and a monitor at $1,000 or $725 per computer and $425 per monitor. How much producer surplus is earned by this strategy?
A) $1,050
B) $880
C) $1,250
D) $975

Question

(Table: Willingness to Pay II) Assume that the marginal cost of a computer is $500 and the marginal cost of a monitor is $200.  Suppose that a mixed bundling strategy sets the price for a computer and a monitor at $1,000 or $725 per computer and $425 per monitor. How much producer surplus is earned by this strategy?
A) $1,050 
B) $880 
C) $1,250 
D) $975

Quizplus · Accepted Answer

The Answer of (Table: Willingness to Pay II) Assume that the marginal cost of a computer is $500 and the marginal cost of a monitor is $200.  Suppose that a mixed bundling strategy sets the price for a computer and a monitor at $1,000 or $725 per computer and $425 per monitor. How much producer surplus is earned by this strategy?
A) $1,050 
B) $880 
C) $1,250 
D) $975

(Table: Willingness to Pay II) Assume That the Marginal Cost