Assume four consumers value two goods: (i) ski lift tickets, and (ii) spa massages in the following way:
Consumer value for Ski tickets value for the spa massages
1 20 120
2 80 80
3 90 60
4 120 30
a. Determine what prices maximize the revenue for ski tickets and spa massages when not sold as part of a bundle?
b. Calculate the revenue maximizing price for a bundle of both A and B?
c. Can you find a mixed bundle that increases revenue relative to bundle in part (b)?
d. Briefly describe whether the value of bundling would be greater if consumer 1 valued skiing more than the consumer 4 AND valued spa massages more than consumer 4. Does this suggest when bundling will be most valuable?