Scenario 17-5
Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafygreens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafygreens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost.
-Refer to Scenario 17-5. If the restaurant is able to use tying to price salads and steaks, what is the profit-maximizing price to charge for the "tied" good?
A)$27
B)$20
C)$19
D)$15

Question

Quizplus · Accepted Answer

The Answer of Scenario 17-5
Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafygreens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafygreens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost.
-Refer to Scenario 17-5. If the restaurant is able to use tying to price salads and steaks, what is the profit-maximizing price to charge for the "tied" good?
A)$27
B)$20
C)$19
D)$15

Scenario 17-5 Assume That a Local Restaurant Sells Two Items, Salads and Salads