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Problem 3 - Vaccine Markets [10 points] Vax-IT is a company that has developed a Covid vaccine. Vax-IT serves the US and Canada. The two
Problem 3 - Vaccine Markets [10 points] Vax-IT is a company that has developed a Covid vaccine. Vax-IT serves the US and Canada. The two markets are separate due to regulation. The demand functions for each are Qus = 260 - 0.4PUS QCA - 240 - 0.5PCA where Q is in thousands of vaccine shots per year, and P is the price per shot. The total cost of production is given by TC - 30, 000 + 100Q where Q - QCA + QUs A. [6 points] What are the profit maximizing prices and quantities in each market? B. [2 points] What is the elasticity of demand at the optimal price/quantity points in the two markets? In which market is demand morewhere Q - QcA + Qus A. [6 points] What are the profit maximizing prices and quantities in each market? B. [2 points] What is the elasticity of demand at the optimal price/quantity points in the two markets? In which market is demand more elastic (again, at the optimal price/quantity points)? C. [2 points] Do your findings under A. (prices in each market) and B. (point elasticities in each market) match what we learned about elasticities and price discrimination in class? Problem 4 - Tennis Lessons [16 points] A typical tennis player in West L.A. has the following demand for tennis lessons
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