You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of th

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You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of the other) who shop in your specialty clothing store. Consumers of type R will pay __B= $80__ for a coat and __C= $ 60__ for pants. Consumers of type S will pay __D= $60__ for a coat and __E= $ 75__ for pants. Your firm faces no competition and but it does pay for the clothing, __F=$30__ per coat and __G= $ 50__ per pair of pants, i.e. MCcoat = __F= $30__ and MCpants= __G= $ 50__. You can’t price discriminate. You offer the same prices to all your customers.

Answer True or False and then show or explain how you reached your conclusion.: Profits in Part (B) with bundling are higher than in Part (A) of this problem.

Answer: ________________

 
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