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 AType 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 3 years ago
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