Refer to Table 6-2. Assume that the monopolist sells only health drinks to Group

Question

Refer to Table 6-2. Assume that the monopolist sells only health drinks to Group 1 and only fruit juices to Group 2. What profit will the monopolist earn?

The following table gives the valuations of fruit juices and health drinks by two groups of consumers in the city of Vanilla. A single producer of both products controls the entire market for beverages in this city and is considering strategies to bundle one bottle of health drink with one bottle of fruit juice. Assume that the marginal cost of supplying both varieties is $2 each.
___________________________________________
PRODUCTS GROUP 1 GROUP 2
HEALTH DRINKS $15 $6
FRUIT JUICES $8 $20
_____________________________________________
Which Answer:
$35
$10
$31
$14

Explanation / Answer

health drink to group 1 = $15
fruit juice to group 2 = $20

15 + 20 = $35

$35

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