Suppose that a manufacturer sells a product through an upscale boutique and, with a different brand name, through a discount retailer. The elasticity of demand at the boutique is -4, and at the discount retailer it is -3.

a) Write the formula that connects marginal revenue to price elasticity of demand through price of the good. [2 marks]

b) Use the formula from part a) to calculate marginal revenue in the boutique if the optimal price at the boutique is $72. [4 marks]

c) If the optimal price at the boutique is $72, what price should be charged at the discount retailer? [6 marks] (Hint: Consider marginal revenues in the two markets.