Question
Kosty Koffie is a coffee shop inBerkeley, California. The coffee market in Berkeley has two very different types of customers. There are many wealthy working
Kosty Koffie is a coffee shop inBerkeley, California. The coffee market in Berkeley has two very different types of customers. There are many wealthy working professionals and a large number of considerably less wealthy college students. The demand functions for coffee from these two groupsare, respectively:
qP=900100PP
and
qS=20040PS
where qP is the number of coffee drinks demanded by professionals and qS is the number of coffee drinks demanded by students. PP is the price of a coffee drink for aprofessional, and PS is the price of a coffee drink for a student. Solving the demand functions for theprice, P, as a function of the quantitydemanded, q, gives the two inverse demand functions for coffee for these twogroups:
PP=90.01qP
and
PS=50.025qS.
The cost of selling Q coffee drinksis:
TC(Q)=2Q+100.
- Theprofit-maximizing quantity of coffee drinks Kosty Koffie will sell to professionals is ??? and the quantity it will sell to students is ???
- The price charged by Kosty Koffie for a coffee to a professional will be $ ??? and the price charged to a student will be $ ???
- The amount of economic profit or loss that Kosty Koffie earns is $ ???
.
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