At a student cafe', there are equal numbers of two types of customers with the following values. The cafe owner cannot distinguish between the two types of students because many students without early class arrive early anyway (i.e she cannot price discriminate).
The Marginal cost (MC) of coffee is 10. The MC for banana is 40. Is bundling more profitable than selling separately? If so what price should be charged for the bundle?
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Students with Early Class
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Students without Early Classes
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Coffee
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70
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60
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Banana
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50
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100
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