Suppose that JVC is trying to decide how to price a new stereo system composed of

Suppose that JVC is trying to decide how to price a new stereo system composed of a receiver, CD player, and speakers. The company's economists have estimated that two different groups will purchase these products: students and club owners. The economists' analysis suggests that the total market for its brand of stereos consists of 10 students and 50 club owners. In addition, it is estimated that the maximum amount each group will pay for each stereo component is as follows:

Groups

Receiver

CD player

Speakers

Bundle

Students

$250

$150

$100

$500

Club owners

$200

$75

$250

$525

30. Refer to the above information. If JVC charges $200 for a receiver and $125 for a CD player, the firm will

sell a receiver to:

A. students B. club owners

C. students and club owners

D. None of the answers are correct

31. Refer to the above information. Suppose that JVC markets the receiver, CD player, and speakers together. That is, it uses a commodity-bundle strategy such that the products are sold as one item. What price should JVC charge to maximize revenues?

A. $500

B. $525

C. $480

D. $510