1. A firm has two groups of customers. Group 1 has an own-price elasticity of demand of

e_d = -2. Group 2 has e_d = -20. If the profit-maximizing price for Group 2 is $10, how much should they charge Group 1?

2. A firm selling premium disc golf discs has a per disc marginal cost of $30. The firm's core customers have an elasticity of demand of -6 (e_d = -6). It wants to issue a coupon for another group, which it estimates has an elasticity of demand of -16 (e_d = -16).

a. Using the optimal markup formula, find the profit-maximizing price the firm should charge its core customers.

b. What dollar amount should the coupon be for?