Draw on the reservation prices provided in Question 6 and assume mixed bundling.
Suppose the bundle...

Question

Draw on the reservation prices provided in Question 6 and assume mixed bundling.
Suppose the bundle price is set at $3, the price for Coke only is set at $2.60. The price of
French Fries is unknown at this point. Jim and Jen like French Fries and won’t buy a
Coke without any food. Under what circumstances will the following come true:
(a) neither one buys anything
(b) one buys nothing, one buys the bundle
(c) both buy the bundle
(d) one buys the bundle and one buys fries only
(e) both buy fries only
Briefly explain.

Robert · Accepted Answer

(6) Suppose two people have the following reservation prices (max WTP) for French 
Fries and for Coke: 
French Fries Coke 
Jim $1.50 $2.20 
Jen $2 $1.80
Draw on the reservation prices provided in Question 6 and assume mixed bundling. 
Suppose the bundle price is set at $3, the price for Coke only is set at $2.60. The price of 
French Fries is unknown at this point. Jim and Jen like French Fries and won’t buy a 
Coke without any food. Under what circumstances will the following come true: 
(a) neither one buys anything 
Answer: 
This would happen when price of French fries is greater than $2. In such a case,

Draw on the reservation prices provided in Question 6 and assume mixed bundling. Suppose the bundle price is set at $3, the price for Coke only is set at $2.60. The price of French Fries is unknown at...

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