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Business, 24.09.2020 02:01 scl

A monopoly sells two products, of which any given consumer wants to buy only one (and places no value on the other good - i. e. uncorrelated reservation prices). If the monopoly can prevent resale, can it increase its profit by bundling the goods, forcing the consumers to buy both goods? With bundling, the monopoly's profits A. will increase because consumer reservation prices for the two goods are negatively correlated. B. will not increase because consumer reservation prices for the two goods are positively correlated. C. will increase because the bundled price equals the combined values of the two goods. D. will not increase because it cannot charge more for the bundle than for the valued good. E. will increase because it will cost less to produce both goods jointly.

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