eco204_HW_19 - University of Toronto Department of...

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University of Toronto, Department of Economics, ECO 204 2008 2009 S. Ajaz Hussain ECO 204 2008 2009 Ajaz Hussain HW 19 Please review Lecture 21 , Bundling spreadsheet model and especially the note on mixed bundling prices Question 1 (2007 2008 Test 4 Question) Ajax Studios has produced two movies “ Canada: No Country for Old Economists ” and “ Who Am I? John Nash vs. John Nash ”. The table below shows three Chains’ willingness to pay (WTP) for the two movies and Ajax’s marginal cost of releasing a movie. All numbers are in ‘000s of dollars per cinema per week. Each chain has 100 multi screen cinemas: Chain Canada: No Country for Old Economists Who Am I? John Nash vs. John Nash Chain A 8 20 Chain B 14 14 Chain C 20 8 Marginal Cost 10 10 (a) Find the optimal weekly prices per screen for releasing the movies separately. Show all calculations and keep explanations brief. (b) Find the optimal weekly prices per screen for releasing the movies as a pure bundle. Show all calculations and keep explanations brief.
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eco204_HW_19 - University of Toronto Department of...

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