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Unformatted text preview: type. It costs Microsoft $5 to produce each piece of software. If Microsoft wants to devise a pricing strategy that is incentive compatible between consumer types and will maximize its profit, then it should A. charge $50 for PowerPoint, $80 for Excel and $75 for Word. B. charge a single price of $250 for the bundle of PowerPoint, Excel and Word. C. charge $125 for PowerPoint, $175 for Excel and $150 for Word. D. charge $325 for the bundle of PowerPoint, Excel and Word and permit consumers to purchase each software title individually at $81.10 each. 27. Suppose you are an analyst for the Coca‐Cola Company. An individuals' inverse demand for Coca‐
Cola is estimated to be P = 98 ‐ 4Q (in cents). If Coca‐Cola is produced according to the following cost function C(Q) = 1,000 + 2Q (in cents), compute the optimal price and the number of cans to sell as a single package. A. $1200 per package and 12 cans. B. $12 per package and 24 cans. C. $11.52 per package and 12 cans. D. $15 per package and 16.67 cans. 28. A potential entrant knows that it faces a (inverse)...
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- Fall '12