Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An umbrella manufacturer sells its product in Nevada and Oregon. Due to different climates, each state has different demands for umbrellas. The marginal cost of

image text in transcribed
An umbrella manufacturer sells its product in Nevada and Oregon. Due to different climates, each state has different demands for umbrellas. The marginal cost of production is the same in each state and is a constant $10. The demand curve for raincoats in each state is: Qoregon = 120 - 2P (or P = 60 - 0.5Qoregon) QNevada = 60 - 4P (or P = 15 -0.25QNevada) The umbrella manufacturer wants to practice third-degree price discrimination. How much should it charge in each state? (Assume that resale between the states is not possible.) O P = $10 (price = marginal cost) in both Oregon and Nevada. O P = $35 in Oregon and P = $10 in Nevada. O P = $35 in Oregon and P = $12.5 in Nevada. O It should only sell in Oregon, and charge P = $35 there. O None of the above choices are correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sociology Of Economic Innovation

Authors: Francesco Ramella

1st Edition

1317621344, 9781317621348

More Books

Students also viewed these Economics questions