Answer (A) is correct . A by-product is a product of relatively minor importance generated during the production of one or more other products. Its production entails no additional costs. Any amount received above the storage and delivery costs for a by-product allows the seller to reduce the main product’s price to make it more competitive.
Answer (B) is incorrect because Optional products are offered for sale along with the main product. They are unlikely to have a zero production cost, so the seller must receive a price above their storage and delivery costs.
Answer (C) is incorrect because Captive products must be used along with the main product, such as film for use with a camera. Sellers often make their profits on the captive products rather than on the main product, which is sold at a low price. The captive products therefore will be priced well above the storage and delivery costs.
Answer (D) is incorrect because Product bundles are combinations of products sold together at a reduced price, such as season tickets for a theater. Products are bundled to promote the sale of certain items that consumers might not otherwise purchase. The combined price of the bundle must be low enough to encourage consumers to buy the bundle but must recover production costs and provide some profit for the seller, so the price must exceed storage and delivery costs.
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