Use the Information Below to Answer the Following Question(s)

question 27

Multiple Choice

Use the information below to answer the following question(s) .
John's Video Game Outlet encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the video games are sold as a single package. Managers at John's are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows:
The unit manufacturing costs are $3.60, $4.00, and $5.00 for games A, B, and C, respectively.
-Calculate the revenue allocation for Game A in Package 1, using physical units as the base.

• A) $12.57
• B) $13.97
• C) $20.84
• D) $22.00
• E) $23.16

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Definitions:

Marginal Product

The additional output that results from using one more unit of a particular input, keeping other inputs constant.

Variable Input

Any resource used in production whose quantity can be changed in the short term to increase or decrease output.

Marginal Revenue Product Curve

A graphical representation showing how the additional revenue generated by employing one more unit of a resource varies with the quantity of the resource employed.

Marginal Revenue Product Curve

A graphical representation showing how the revenue generated from selling an additional unit of output changes as more of the output is produced.