A manufacturer of microwaves has discovered that male shoppers have little value for
microwaves and attribute almost no extra value to an auto-defrost feature. Female
shoppers generally value microwaves more than men and attribute greater value to the
auto-defrost feature. There is little additional cost to incorporating an auto defrost feature.
Since men and women cannot be charged different prices for the same product, the
manufacturer is considering introducing two different models. The manufacturer has
determined that men value a simple microwave at $70 and one with auto-defrost at $80
while women value a simple microwave at $80 and one with auto defrost at $150. If there is
an equal number of men and women, what pricing strategy will yield the greatest revenue?
What if women comprise the bulk of microwave shoppers?