(Table: Willingness to Pay II) Assume That the Marginal Cost

question 123

Multiple Choice

(Table: Willingness to Pay II) Assume that the marginal cost of a computer is $500 and the marginal cost of a monitor is $200. Suppose that a mixed bundling strategy sets the price for a computer and a monitor at $1,000 or $725 per computer and $425 per monitor. How much producer surplus is earned by this strategy?

• A) $1,050
• B) $880
• C) $1,250
• D) $975

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