Republic of the Philippines

Laguna State Polytechnic University

Province of Laguna
ISO 9001:2015 Certified
Level I Institutionally Accredited

Name: Baliwag, Dannica C. Date: Oct. 25, 2022

Federizo, Marian Crizel M.
Section: 1BSA1 Subject: AE 11 – ManEco

Engaging Activity #1

Group Activity

1. Concert prices have increased coincidentally with illegal downloading of music off
the Internet. Why?

The reason why concert prices have increased coincidentally with illegal
downloading of music off the internet is to seek a better profit for the
performers and their company. Since they will not be able to gain a profit
from downloading music off the Internet because of it being illegal, they will
try to find strategies to come up with a solution. This is accomplished by
raising concert ticket prices, as recording sales are sadly losing ground to
illegal internet music downloading or piracy. It is also reasonable to increase
the concert prices as it symbolizes their hard work being paid off. To put it
simply, the marginal revenue of concert sales decreases. Hence, there will be
an increasing price for concert tickets as an answer.

2. The pricing model for iTunes has been to price songs individually. Instead, Spotify
opted to offer unlimited song playing for a monthly fee. Would Spotify’s pricing
model likely yield more profit than pricing songs individually?

There is more profit in individual selling of products than bundling however,

return of investment is faster in bundled products. Spotify's pricing model
will likely yield more profit than pricing songs individually because the
strategy is similar through bundling. Through bundling, it extracts more
consumer surplus if willingness to pay for the bundle is more homogeneous
than willingness to pay for the separate items in the bundle. As a result, it
will increase profit. Additionally, people would also be likely to choose
Spotify’s pricing model as it is more convenient and cheaper than iTunes,
which is too expensive for lower-value consumers.