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...


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.


























6 am customer8 am customer
Coffee0.700.60
Donut0.501.00
Bundle1.201.60

  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.



Jun 09, 2022
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