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[answered] A cable company offers two basic packages: sports and kids


A cable company offers two basic packages: sports and kids package and a combined package. There are three different types of users: parents, sports fans and generalists. The following table shows the maximum price that each type of consumer is willing to pay for each package.

Type of Users

Sports Package

Kids Package

Parents

$10

$50

Sports Fans

$50

$10

Generalists

$40

$40

1. If the cable company offers any one package for $50 or the combined package for $70, who will buy each package? Explain your reasoning.

2. Explain why the company will make a higher profit with this method than if the bundled package option were not offered.

 


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