1. Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at $90. If the programs are sold separately, what are the profit-maximizing prices?
A. $20 for Word; $40 for Excel
B. $20 for Word; $90 for Excel
C. $100 for Word; $40 for Excel
D. $100 for Word; $90 for Excel
2. Adults have more money than teenagers and perhaps more inelastic demand for video games than teenage video gamers. Why might it be difficult to price discriminate based on this fact?
A. Teenage gamers could exploit arbitrage opportunities, buy games at the low price, and re-sell them to adult gamers.
B. It is impossible to tell who is a teenager and who is an adult.
C. It is not true that adults have more money than teenagers.
D. The monopolist might not want to segment the market.