Bundling Always Increases a Multi-Product Monopolist's Profit

question 45

Multiple Choice

Bundling always increases a multi-product monopolist's profit:

• A) whenever the marginal rate of substitution is decreasing.
• B) whenever an increase of a dollar in the willingness to pay for one good implies an increase of a dollar in the willingness to pay for another good and the marginal cost is zero.
• C) when doing so does not alter consumers' willingness to pay for the bundle and the monopolist can extract all of aggregate surplus as profit.
• D) if and only if the monopolist is also perfectly price discriminating.

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