Essay
You are the manager of a gas station in a small town,and your goal is to maximize profits.Based on your experience,the elasticity of demand of Texans for a car wash is -2,while that of non-Texans is -1.5.Your marginal cost is $6.
a.Are the conditions necessary for price discrimination to be an effective means of enhancing profits being met?
b.What is the profit-maximizing price to charge a Texan for a car wash?
c.What is the profit-maximizing price to charge a Californian for a car wash?
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Correct Answer:
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c.Price f...View Answer
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