Which of the following statements is TRUE?
A) Cable companies have a hard time knowing which customers have a high willingness to pay for specific channels and which consumers have a low willingness to pay, making bundling an effective pricing strategy.
B) Cable companies have high marginal costs and low fixed costs of production, making bundling an ineffective pricing strategy.
C) Cable companies have low marginal costs and high fixed costs of production, making bundling an ineffective pricing strategy.
D) Cable companies easily know which customers have a high willingness to pay for specific channels and which consumers have a low willingness to pay, making bundling an ineffective pricing strategy.

Question

Quizplus · Accepted Answer

Cable companies have a difficult time determining which customers are more willing to pay for certain channels and which ones are less willing to pay. Bundling allows companies to offer a package deal that appeals to a wider range of customers, increasing revenue.

Which of the Following Statements Is TRUE