Assume a company can offer customers cable television and Internet service at essentially zero marginal and average cost.The following table shows each customer's marginal willingness to pay for television,Internet services,and for a bundle containing both.Which strategy yields the maximum profit,and what maximum profit is obtained?

Question

Quizplus · Accepted Answer

Selling separately:
- Offering only TV yields a profit of $120 (30*4)
- Offering only internet yields a profit of $160 (40*4)
- Total profit from selling separately: $120 + $160 = $280

Bundling:
- Offering a bundle yields a profit of $320 (80*4)
- As bundling results in a higher profit than selling separately, the company should choose to bundle to maximize profit.

Assume a Company Can Offer Customers Cable Television and Internet