ABC Publishing offers an economics textbook along with a study guide. Raheel values the textbook at Rs 75 and the study guide at Rs 15. Mariam values the textbook at Rs 60 and the study guide at Rs 25. Assuming the marginal cost of producing both items is zero, what is the optimal bundled price ABC Publishing should set if it decides to sell the two products together?
Explanation
Since the marginal cost of producing the textbook and study guide is zero, the publisher can maximize revenue by bundling the products. Raheel's total willingness to pay is Rs 75 + Rs 15 = Rs 90, and Mariam's total is Rs 60 + Rs 25 = Rs 85. Setting the bundle price at Rs 85 allows both customers to purchase the bundle, maximizing sales and profits.