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Question: Suppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.)

a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods?

b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle?

c. Should this be legal?

Microeconomics, Economics

  • Category:- Microeconomics
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