Multiple Choice
The price elasticity of demand for senior citizens purchasing coffee from McDonald's is −5,while non-senior citizens have a price elasticity of demand equal to −1.25.If it costs McDonald's $0.02 to produce a coffee,the optimal price for a cup of coffee for senior citizens and the resultant marginal cost under third-degree price discrimination are,respectively:
A) $0.016 and $0.20.
B) $0.02 and $0.80.
C) $0.025 and $0.02.
D) $0.10 and $0.02.
Correct Answer:
Verified
Correct Answer:
Verified
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