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Problem regarding the convenience group

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Paul's Plumbing is the only plumber in a small town. Paul's daughter has come back home to visit after getting her MBA. She has gotten interested in her father's pricing of his services. One of his services is replacing water heaters. Some customers want their water heaters replaced quickly because their old water heater failed; call these the "urgent" group. But some customers want their water heaters replaced at his convenience to improve their efficiency; call this the "convenience" group. The father told the daughter that his price for replacing a water heater is the same for the urgent and convenience groups and that he currently charges the same price for all water heater installations. She has estimated that the price elasticity for the urgent group is smaller (in absolute value) than it is for the convenience group. What price changes should the daughter recommend to her father the plumber?

Reference no: EM131415937

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