Bundling can increase efficiency especially when:
A) both fixed costs and marginal costs are high.
B) both fixed costs and marginal costs are low.
C) fixed costs are high and marginal costs are low.
D) fixed costs are low and marginal costs are high.

Question

Quizplus · Accepted Answer

When fixed costs are high and marginal costs are low, bundling can increase efficiency by spreading the fixed costs over a larger range of products or services. This can result in lower average costs per unit, which can make the bundled products or services more competitive in the market. Additionally, bundling can increase revenue by selling multiple products or services to a single customer, thus increasing economies of scale.

Bundling Can Increase Efficiency Especially When