The reservation prices (in dollars) of three classes of demanders (classes A, B, and C) for Ricky Parton's (a Latin country-western singer) compact disks are given in the table that follows:
CD1 CD2
A 11 5
B 8 9
C 9 10
What pricing method would you advise Ricky's company to use?
I don't understand the actual answer to the question.
In case of separate pricing, here is what I thought would be correct. We have for CD1 three different customers, the highest reservation price is 11, implying a profit of 7. So I would multiply it by 3 and find 21. Afterwards I would repeat the same operation with CD2: highest profit is 6. Multiply it by 3=18. And now add these two numbers to find the overall separate pricing profit..
Apparently this is wrong.