Use the following to answer question:
Table 10.5
-(Table 10.5) Assume that the marginal cost of producing software is zero. If the firm priced and sold each program separately, it would earn total revenues of _____, while a pure bundling strategy would generate the firm total revenues of _____.
A) $450; $900
B) $380; $450
C) $700; $760
D) $600; $660

Question

Use the following to answer question:
Table 10.5 
-(Table 10.5) Assume that the marginal cost of producing software is zero. If the firm priced and sold each program separately, it would earn total revenues of _____, while a pure bundling strategy would generate the firm total revenues of _____.
A) $450; $900 
B) $380; $450 
C) $700; $760 
D) $600; $660

Quizplus · Accepted Answer

Total revenue for selling programs separately: 
Program A: $100
Program B: $200
Program C: $250
Program D: $100

Total revenue = $100 + $200 + $250 + $100 = $650

Total revenue for bundling all four programs together: $760

Therefore, the best choice is a pure bundling strategy, which would generate the firm total revenues of $760.

Use the Following to Answer Question