Which of the following is a reason for firms to bundle products?
A. To clear the old stock of the product
B. To extract additional profit from a customer base with heterogeneous product demand
C. To increase customer welfare and satisfaction
D. To extract additional profit by charging higher prices for the goods in a bundle
Answer: B
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In the decade leading up to the financial crisis of 2008, U.S. housing prices:
A. were falling sharply. B. were rising rapidly. C. increased slowly. D. did not change.
In the above figure, what factor might have caused the shift in the short-run Phillips curve from SRPC1 to SRPC2?
What will be an ideal response?
Which of the following equations based on capital (K) and labor (L) inputs does not represent a plausible production function?
A) F(K,L) = 3KL B) F(K,L) = 3K C) F(K,L) = K + L - 1 D) F(K,L) = 10(KL)0.5
Answer the following statements true (T) or false (F)
1) If competitive firms spent money on advertising their product, their profits would decrease. 2) The profit-maximizing quantity and price is determined after the optimal amount of advertising is determined. 3) To maximize profits, managers should purchase the quantity of advertising that maximizes gross profit. 4) If a firm only has one advertising medium, it maximizes its profit by first setting the marginal benefit from its product equal to its marginal cost of production and then determining the optimal amount to advertise. 5) It is possible for firms to not maximize profits even if they have optimally allocated their fixed advertising budget.