MicroStuff is a software company that sells two popular applications, WordStuff and ExcelStuff. It doesn’t cost anything for MicroStuff to make each additional copy of its applications. MicroStuff has three types of potential customers, represented by Ingrid, Javiera, and Kathy. There are 100 million potential customers of each type, whose valuations for each application are as follows:
(a) If MicroStuff sets separate prices for WordStuff and ExcelStuff, what price should it set for each application to maximize its profit? How much profit does MicroStuff earn with these prices?
(b) What does each type of customer (Ingrid, Javiera, Kathy) buy when MicroStuff sets profit-maximizing, separate prices for WordStuff and ExcelStuff?
(c) Instead of selling the applications separately, MicroStuff decides always to sell WordStuff and ExcelStuff together in a….