question archive An opera house is offering three performances, and has two types of consumers
An opera house is offering three performances, and has two types of consumers
Subject:EconomicsPrice:2.87 Bought7
An opera house is offering three performances, and has two types of consumers. The performances are "Carmen," "Madama Butterfly," and "Eugene Onegin." Consumer 1 has WTP of $100 for a ticket to "Carmen," $200 for "Madama Butterfly," and $70 for "Eugene Onegin." Consumer 2 has WTP of $120 for "Carmen," $100 for "Madama Butterfly," and $150 for "Eugene Onegin." Each ticket costs the opera house $40. How should the opera house bundle the goods?
1) Bundle the three operas together.
2) Bundle "Madama Butterfly" and "Eugene Onegin," and sell "Carmen" separately.
3) Bundle "Carmen" and "Eugene Onegin," and sell "Madama Butterfly" separately.
4) Sell each opera separately.
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Answer:
Customers purchase a good only if its price is less than the customer’s reservation price.
Total WTP of consumer 1 = 100 + 200 + 70 = 370
Total WTP of consumer 2 = 120 + 100 + 150 = 370
Hence, all the three operas should be bundled together.
