Question
In: Economics
ou manage a cable company that offers 2 channels - NBC and Fox.You face 2...
ou manage a cable company that offers 2 channels - NBC and Fox. You face 2 types of customers (type A and type B) and there are 100 customers of each type. Their respective values for each channel are:
| Type A | Type B | |
| NBC | $10 | $15 |
| Fox | $3 | $7 |
If the marginal cost of selling each channel is $1 per channel, what is the most profitable strategy?
sell the channels separately | ||
bundle the channels | ||
indifferent between selling separately and bundling the channels |
Solutions
Expert Solution
Option A is the right option
It is more profitable because NBC consumers more than the fox, and type B consumers are willing to pay more than type A. It means selling separately will increase the profits.
It is an indirect price differentiation strategy.
Rahul Sunny answered 2 years agoRelated Solutions
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