At a student cafe, there are equal numbers of two types of customers with the fo

Question

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 classes arrie early anyway (i.e., she cannot price discriminate).

                             students with                          students withou

                             early classes                          early classes

coffee                            70                                        60

banana                          50                                        100

The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? if so, what price should be charged for the bundle?

Explanation / Answer

Bundling is defintely more profitable. seeing the demands of cofee being comparable whereas a lot differing in demand of banana, we can fix a proce which suits both type of customers..something near rs 55.

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