Suppose Jason is willing to pay $5 for a tennis ball and $10 for a tennis racquet, while Joe is willing to pay $12 for a tennis ball but only $8 for a tennis racquet.In addition, the retailer knows exactly what Jason and Joe are willing to pay.Which strategy should the retailer use to maximise profits?

Question

Quizplus · Accepted Answer

The retailer should use tying sales strategy by bundling the tennis ball and tennis racquet together and selling them as a package. This way, Jason and Joe will have to pay the same price for both items and the retailer can charge a higher overall price, maximizing profits. Resale price maintenance, competitive pricing, and monopoly pricing may not be as effective in this situation as they do not take into account the different willingness to pay of each customer for each item.

Suppose Jason Is Willing to Pay $5 for a Tennis