Question
David is the owner-manager of a car wash in a small town in Texas, and his goal is to maximize profits. Based on David's experience,
David is the owner-manager of a car wash in a small town in Texas, and his goal is to maximize profits. Based on David's experience, the elasticity of demand of Texans for a car wash is -2, while that of non-Texans is -1.5. His marginal cost is $6. Based on this information, answer the following questions:
- Do the conditions support using price discrimination as an effective means of enhancing profits? Explain.
- What is the profit-maximizing price to charge a Texan for a car wash?
- What is the profit-maximizing price to charge a non-Texan for a car wash?
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Research In Forest Economics And Forest Policy
Authors: Marion Clawson
1st Edition
1317362624, 9781317362623
