What is the optimal bundle to offer adults

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Reference no: EM131180562

A ready-to-eat cereal manufacturer faces two types of consumers, adults and children, having the following schedule of gross surpluses for each additional unit of cereal consumed

OUNCE OF CEREAL	MARGINAL SURPLUS THIS OUNCE PROVIDES ADULTS IN CENTS	MARGINAL SURPLUS THIS OUNCE PROVIDES CHILDREN IN CENTS
First	20	40
Second	16	32
Third	12	24
Fourth	8	16
Fifth	4	8
Sixth	0	0
Seventh	0	0

Cereal costs $0.15 per ounce to produce.

The manufacturer has full information about types because adults hate sweet children's cereal and children hate the fiber-filled adult cereal.

What is the optimal bundle to offer adults and to children in this full-information setting?

Reference no: EM131180562

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