Answer the Following Questions Using the Information Below:
Buzz's Educational

question 80

Multiple Choice

Answer the following questions using the information below:
Buzz's 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:
$$\begin{array} { | l | c | c | l | c | } \hline & \begin{array} { c } \text { Stand-Alone } \\\text { Selling Price }\end{array} & { \text { Cost } } &{ \text { Package } } & \begin{array} { c } \text { Packaged } \\\text { Price }\end{array} \\\hline \text { Reading Fun } & \$ 25 & \$ 3.60 & \text { 1. Reading Fun \& Math Fun } & \$ 44 \\\hline \text { Math Fun } & \$ 30 & \$ 4.00 & \text { 2. Reading Fun \& Analysis } & \$ 56 \\\hline \text { Analysis } & \$ 45 & \$ 5.00 & \text { 3. All three } & \$ 76 \\\hline\end{array}$$
-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 Analysis.

• A) $24.12
• B) $30.00
• C) $22.80
• D) $25.33

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Definitions:

Pareto Optimal

Another term for Pareto Efficient; describes a situation where no one's condition can be improved without worsening someone else's condition.

Initial Endowment

The initial quantity of goods, services, and assets that an individual, organization, or economy possesses.

Pareto Optimal

An allocation of resources from which it is impossible to reallocate without making at least one individual worse off.

Utility Function

A mathematical representation that captures the level of satisfaction or happiness that consumers derive from consuming goods and services.