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MGM is trying to decide how to price the re-release of the "Terminator" and "Honey I Shrunk the Kids." The following table identifies the willingness to pay for the movies by three theatres. The marginal cost of providing either movie is $5, or $10 to provide both movies to a chain. Theater Chain Terminator Honey Chain 1 13 6 Chain 2 7 11 Chain 3 15 2

A. Under pure component pricing, what prices will maximize MGM's profits?

B. What pure bundling price will maximize MGM's profits?

C. For this final question, assume that MGM could practice first degree price discrimination. Would MGM be willing to sale Honey to Chain 3 for $2?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9689879

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