You run a donut shop. You have two types of customers – early morning, and late morning. Below are the maximum prices a 6 am customer and a 10 am customer are willing to pay for a cup of coffee, a donut, and a coffee/donut bundle. There are 100 customers in each group per day.
Your marginal cost of coffee is $0.10. Your marginal cost of a donut is $0.40. Your marginal cost of a bundle is $0.50.
Is pricing the products separately more profitable than bundling the two products? If so, how should you price your bundle? Show all your computations.
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here