(Table: Customer Valuations for Lawn Services I) The table shows customer valuations for different lawn services.
The marginal cost of lawn cutting is $400, and the marginal cost of fertilizing is $200.
a. Suppose the lawn service prices its services separately. How much should the company charge for lawn cutting and how much for fertilizing? How much producer surplus does the company earn by pricing its services separately?
b. Now suppose the company offers lawn cutting and fertilizing as a bundle. What is the bundle price? How much producer surplus is earned with bundling?

Question

(Table: Customer Valuations for Lawn Services I) The table shows customer valuations for different lawn services.  
The marginal cost of lawn cutting is $400, and the marginal cost of fertilizing is $200. 
a. Suppose the lawn service prices its services separately. How much should the company charge for lawn cutting and how much for fertilizing? How much producer surplus does the company earn by pricing its services separately?
b. Now suppose the company offers lawn cutting and fertilizing as a bundle. What is the bundle price? How much producer surplus is earned with bundling?

Quizplus · Accepted Answer

The Answer of (Table: Customer Valuations for Lawn Services I) The table shows customer valuations for different lawn services.  
The marginal cost of lawn cutting is $400, and the marginal cost of fertilizing is $200. 
a. Suppose the lawn service prices its services separately. How much should the company charge for lawn cutting and how much for fertilizing? How much producer surplus does the company earn by pricing its services separately?
b. Now suppose the company offers lawn cutting and fertilizing as a bundle. What is the bundle price? How much producer surplus is earned with bundling?

(Table: Customer Valuations for Lawn Services I) the Table Shows