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You are the manager of a gas station in a small town, and your goal is to maximize profits. Based on your experience, the elasticity
You are the manager of a gas station in a small town, and your goal is to maximize profits. Based on your experience, the elasticity of demand of Texans for a car wash is -2, while that of non-Texans is -1.5. Your marginal cost is $6. Are the conditions necessary for price discrimination to be an effective means of enhancing profits being met? Explain. What is the profit-maximizing price to charge a Texan and a Californian for a car wash respectively?
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