Question
The Econ Triathlon Company has hired you as their economist. The Econ Triathlon company sells online triathlon training sessions in the USA. Your first task
The Econ Triathlon Company has hired you as their economist. The Econ Triathlon company sells online triathlon training sessions in the USA. Your first task is to estimate the price elasticity of demand for two different markets (California and Kansas). You find that the Kansas market has a price elasticity of demand of -4.2. The California market has an elasticity of - 1.8.Show all work and calculations. (10 points)
a) Qualitatively, explain the significance of your findings. Include in your analysis what you should generally do to the price(s) based on the data (2 points).
b) What might explain the difference in elasticities between the two markets? (2 points)
(c) What market should have the larger markup and why? (2 points)
(d) You have data that shows the marginal cost for both markets is 65 dollars. Are you able to find the optimal price for the Kansas market? If so, what is the optimal price? Show all your work. (2 pts)
(e) You have data that shows the marginal cost for both markets is 65 dollars. Are you able to find the optimal price for the California market? If so, what is the optimal price? Show all your work. (2 pts)
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