but after dr.Chen explain
i suddenly feel that i should had studied the answers she gave
Below is the email i wrote to her -- for question number 1
_________________________________________________
Dear Dr.Chen
Regarding the midterm paper, I do have a query in calculations.
Question 20.
| Customer Type | PhotoKing | Individual pricing | VideoKing
| Individual pricing
| ||
| No. of customers WTP | total | No. of customers WTP | total | |||
| A | $70 | 300 | $21,000 | $80 | 200 | $16,000 |
| B | $80 | 200 | $16,000 | $50 | 400 | $20,000 |
| C | $30 | 400 | $12,000 | $90 | 100 | $9,000 |
| D | $100 | 100 | $10,000 | $70 | 300 | $21,000 |
So, from this we can deduce that both individual pricing should be $70.
The bundle pricing in this case have to be lower than $140. ($70 + $70)
Therefore taking the bundle pricing: $130
Type A, B & D customers would purchase
130 x 300 = 39,000
Type C customers would purchase only video king at $70
70 x 100 = $7,000
Total = $39,000 + $7,000 = $46,000
$120
All type of customers would purchase
120 x 400 = $48,000
Therefore if the firm sells both bundle and individual items, the price for the bundle to obtain maximum profit is $120.
Whereas the answer given by you is $130 instead, I wonder if there are errors in this calculations.___________________________________________________________
okay, if what i said seems correct... then you are WRONG
her reply is below
___________________________________________________________
When the bundle is $130, only Type C consumers will purchase individual items at $30 for PhotoKing and $90 for VideoKing. The total revenue from individual item selling is $30x100+$90x100=$12000. Add this amount to the bundling selling revenue, total revenue =$39000+$12000=$51000.
The seller will not sell individual items at $70 to Type C consumers if they can get higher revenue.
___________________________________________________________tada, sounds correct, i although i had weird feeling about the individual pricing...
but it is convincing in the end.
