Magnet Communications provides both cable TV and internet services. It has two types of customers: old folks value cable at $50 (per month) and internet service at $10, while young folks value cable at $30 and the internet at $50. Assuming that there are equal numbers of old folks and young folks, which of these pricing schemes will earn the most revenue for the company? (a) Just cable = $50, just internet = $50, both $70 (b) Just cable = $40, just internet = $40, both $45 (c) Just cable = $30, just internet = $50, both $70 (d) Just cable = $50, just internet $40, both $80

Magnet Communications provides both cable TV and internet services. It has two types of customers: old folks value cable at $50 (per month) and internet service at $10, while young folks value cable at $30 and the internet at $50. Assuming that there are equal numbers of old folks and young folks, which of these pricing schemes will earn the most revenue for the company? (a) Just cable = $50, just internet = $50, both $70 (b) Just cable = $40, just internet = $40, both $45 (c) Just cable = $30, just internet = $50, both $70 (d) Just cable = $50, just internet $40, both $80

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2.5CE

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