Final answer:
Pure bundling can help increase revenues when customers are willing to pay different prices for different products. By bundling the products together and selling them as a package, a company can capture more of the customers' overall willingness to pay, potentially increasing revenue.
Step-by-step explanation:
Pure bundling can help increase revenues in this case. When two customers are willing to pay different prices for two different products, bundling those products together and selling them as a package can allow the company to capture more of the customers' overall willingness to pay.
In this scenario, customer A is willing to pay $2000 for product 1 and customer B is willing to pay $3000 for product 1. Furthermore, customer A is willing to pay $3500 for product 2 and customer B is willing to pay $2500 for product 2. If the company were to sell product 1 separately to customer A and product 2 separately to customer B, it would only capture $2000 + $2500 = $4500 in revenue.
However, by bundling the products together and selling the package to each customer for a price between their respective willingness to pay ($2000-$3000 and $2500-$3500), the company can potentially capture more revenue.
For example, if the company decides to price the bundle at $2500, customer A would be willing to purchase it because $2500 is less than what they are willing to pay for product 1 ($2000) and product 2 ($3500). Customer B would also be willing to purchase the bundle because $2500 is less than what they are willing to pay for product 2 ($2500).
In this case, the company would capture $2500 from each customer, resulting in a total revenue of $5000, which is higher than $4500.