Firms bundle their products because
A) It is technologically efficient to do so
B) It can increase a firm's ability to extract consumer surplus
C) It can increase a firm's profits
D) All of these

Question

Quizplus · Accepted Answer

Firms bundle their products for a variety of reasons, including technological efficiency (A) and increasing their ability to extract consumer surplus (B), but ultimately, the main goal is to increase profits (C). By offering multiple products together, firms can increase the total value of the bundle and charge a higher price than if the products were sold separately. Additionally, bundling can encourage customers to purchase more than they otherwise would, leading to increased sales and revenue for the firm. Therefore, all three options are correct, and the answer is D.

Firms Bundle Their Products Because