GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--for simplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a bundle consisting of both packages. The following are the consumer reservation prices for each package: Wheels Consumer Interior A 11 24 В 35 12 С 18 28 A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate
GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--for simplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a bundle consisting of both packages. The following are the consumer reservation prices for each package: Wheels Consumer Interior A 11 24 В 35 12 С 18 28 A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal magnitudes--for
simplicity, consider it one of each type). Consumers want (at most) one of each package. It costs GeeM 5 to produce a sporty wheel package and 10 to produce a luxury interior package. It will cost GeeM 15 to produce a
bundle consisting of both packages.
The following are the consumer reservation prices for each package:
Wheels
Consumer
Interior
A
11
24
В
35
12
С
18
28
A consumer's reservation price for a bundle consisting of sporty wheels and a luxury interior is the sum of the individual component reservation prices. GeeM does not price discriminate
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