3. (10 points) The following table contains different consumers' values for three software title

(a) To determine the firm's profit if it charges $50 for PowerPoint, $80 for Excel, and $75 for

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3. (10 points) The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each 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: Consumer Types PowerPoint Excel Word Accountants $75 $100 $150 Marketing/Sales $125 $80 $135 Administrative Assistants $50 $175 $75 (a) What is the firm's profit if it charges $50 for PowerPoint, $80 for Excel, and $75 for Word. You must identify who will buy each product. (b) What is the firm's profit if it charges a single price of $300 for the bundle of PowerPoint, Excel, and Word. You must identify who will buy the bundles. (c) What is the firm's profit if it charges $325 for the bundle of PowerPoint, Excel, and Word and permit consumers to purchase each software title individually at $81.10 each. You must identify who will buy the bundles and who will buy which product separately.

          3. (10 points) The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each 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:

Consumer Types PowerPoint Excel Word
Accountants $75 $100 $150
Marketing/Sales $125 $80 $135
Administrative Assistants $50 $175 $75

(a) What is the firm's profit if it charges $50 for PowerPoint, $80 for Excel, and $75 for Word.
You must identify who will buy each product.
(b) What is the firm's profit if it charges a single price of $300 for the bundle of PowerPoint, Excel, and Word. You must identify who will buy the bundles.
(c) What is the firm's profit if it charges $325 for the bundle of PowerPoint, Excel, and Word and permit consumers to purchase each software title individually at $81.10 each. You must identify who will buy the bundles and who will buy which product separately.

3. (10 points) The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each 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:

Consumer Types PowerPoint Excel Word
Accountants75 100150
Marketing/Sales 12580 135
Administrative Assistants50 17575

(a) What is the firm's profit if it charges 50 for PowerPoint,80 for Excel, and 75 for Word.
You must identify who will buy each product.
(b) What is the firm's profit if it charges a single price of300 for the bundle of PowerPoint, Excel, and Word. You must identify who will buy the bundles.
(c) What is the firm's profit if it charges 325 for the bundle of PowerPoint, Excel, and Word and permit consumers to purchase each software title individually at81.10 each. You must identify who will buy the bundles and who will buy which product separately.

Added by Nicolas N.

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