You are the ceo for a small, struggling software firm that produces educational software for high school students. your latest software is designed to students improve their sat and act test scores. to prove the value of your software, a group of 50 students who had taken the act test were retested after using your software for four weeks. unfortunately, there was no dramatic increase in their scores. a statistician you hired to ensure objectivity in measuring the results claimed that the variation in test scores was statistically insignificant. you had been counting on touting the results in the promotion of your new software. a small core group of educators and systems analysts will need at least six months to start again from scratch to design an improved product. programming and testing could take another six months. another option would be to go ahead and release the current version of the product and then, when the new product is ready, announce it as a new release. this would generate the cash flow necessary to keep your company afloat and save the jobs of 10 or more of your 15 employees. given this information about your company’s product, what would you do?

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i. e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.