Find the willingness to pay distribution of the customers

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Reference no: EM131004992

A car wash in a metropolitan area services a community of 50000 people. The car wash charges $14 per car wash. For every dollar increase in the price of a car wash the potential number of customers that could use the car wash decreases by 2500. It costs the owner of the car wash $10 per car to provide the service.

a. Find the willingness to pay distribution of the customers of the service station. b. Find the contribution maximizing price, the total contribution, the demand, and the price elasticity at the contribution-maximizing price. Should the car wash increase, decrease or keep the same current price? c. Find the consumer surplus if an individual car wash is priced at the contribution maximizing price.

Reference no: EM131004992

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