Albatross Software Has Two Main Products: WindSong Is a Program

question 47

Multiple Choice

Albatross Software has two main products: WindSong is a program that can be used to edit audio files and SunBurst is a program that can be used to edit digital photos. The two major types of customers are small businesses and home users. The small business customers have a reservation price of $300 for WindSong and $450 for SunBurst. The home users have a reservation price of $100 for WindSong and $125 for SunBurst. Which of the following statements is true?

• A) Bundling the two software products is not likely to be profitable because the marginal cost of producing software is positive by very small.
• B) Bundling the two software products is not likely to be profitable because the consumer demands are homogeneous.
• C) Bundling the two software products is likely to be profitable because the demands are negatively correlated.
• D) Bundling the two software products is not likely to be profitable because the demands are positively correlated.

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Definitions:

Operating Expenses

Costs associated with the day-to-day functions of a business excluding the cost of goods sold.

Fiscal Year

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Ledger

The principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type.

Accounting Equation

A fundamental principle of accounting representing the relationship between a company's assets, liabilities, and equity (Assets = Liabilities + Equity).