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Assignment Seven 4.4.08 - Assignment Seven AGEC 505...

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Assignment Seven. AGEC 505. Agricultural Market Structures. Spring 2008. Due: 11:30 AM, Friday, April 4, 2008. Turn in TYPED hard copy before class. Assignments turned in after 11:30 AM will be marked 10 percent off. This late policy will be strictly enforced . Assignments turned in after the deadline will be marked 10 percent off each day that they are late (for example, an assignment due on Friday that is turned in on Monday will be marked 40 percent off). Exceptions will be granted in advance by the instructor. Assignments must be typed. Fifty percent off for untyped work. READ : Chapter 11, Sections 11.5 and 11.6, Chapter 12, Section 12.1 1. (10 pts) Bundling: Carhartt Coats and Overalls Assume that there are two customers: A and B. Also assume that MC = 0. Each customer’s reservation prices are listed in the table below. Reservation Price ($/unit) Coat Bib Overalls A 100 90 B 180 50 a. (1 pt) Define and explain the practice of “bundling.” b. (4 pts) Find the profit-maximizing prices, quantities, and level of profits if the two goods are sold individually.
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