Answer the Following Questions Using the Information Below:
Adelaide Educational

question 114

Multiple Choice

Answer the following questions using the information below:
Adelaide Educational Software Outlet sells two or more of the video games as a single package.Managers are keenly interested in individual product-profitability figures.Information pertaining to three bundled products and the stand-alone prices is as follows:
$$\begin{array} { | c | c | c |c| c | c | } \hline & \begin{array} { c } \text { Stand-Alone } \\\text { Selling Price }\end{array} & \text { Cost } && \text { Package } & \begin{array} { c } \text { Packaged } \\\text { Price }\end{array} \\\hline \text { Reading Fun } & \$ 55 & \$ 7.20 && \text { 1. Reading Fun \& Math Fun } & \$ 98 \\\hline \text { Math Fun } & \$ 65 & \$ 8.00 && \text { 2. Reading Fun \& Science } & \$ 122 \\\hline \text { Science } & \$ 95 & \$ 10.00 && \text { 3. All three } & \$ 162 \\\hline\end{array}$$
-Using the incremental method,what amount of revenue will be allocated to Math Fun in the package that contains all three products? Assume Reading Fun is the primary product,followed by Math Fun,and then Science.

• A)$50.67
• B)$65.00
• C)$45.60
• D)$48.25

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Definitions:

Marginal Revenue

The heightened income realized from the sale of one more unit of a good or service.

Marginal Cost

The price involved in creating one more unit of a specific good or service.

Marginal Revenue

The additional income gained from selling one more unit of a good or service; it’s a critical concept for determining the optimal level of output for a firm.

Profit-maximizing Firm

A business entity whose primary goal is to generate the highest possible profit from its operations and investments.