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Optimal price in san antonio

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Demand across the two locations

You realize that you can probably raise your profits by price discriminating by charging different prices in the two locations. You then breakdown sales across the two locations

In Laredo: You sold 200 burger meals per week at $9 and 100 meals at $10

In San Antonio: You sold 1200 meals per week at $9 and 1100 meals at $10

a. Using the two prices above, estimate your demand function in Laredo. What would demand be at the optimal price from Q1?

b. Using the two prices above, estimate your demand function in San Antonio. What would demand be at the optimal price from Q1?

c. Calculate the point price elasticity of demand at the optimal price for Q1 (and quantity from part A) in Laredo

d. Calculate the point price elasticity of demand at the optimal price for Q1 (and quantity from part B) in San Antonio

e. Assuming that your marginal costs are $3, are you charging more, less, or exactly the optimal price in Laredo

Hint: Calculate the markup on price and compare it to from the earlier question

f. Assuming that your marginal costs are $3, are you charging more, less, or exactly the optimal price in San Antonio

g. Based on your analysis, describe how you should adjust prices in Laredo and San Antonio

Reference no: EM133126901

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