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Profit-maximizing price to charge a texan

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David is the owner-manager of a car wash in a small town in Texas, and his goal is to maximize profits. Based on David's experience, the elasticity of demand of Texans for a car wash is -2, while that of non-Texans is -1.5. His marginal cost is $6. Based on this information, answer the following questions:

  1. Do the conditions support using price discrimination as an effective means of enhancing profits? Explain.
  2. What is the profit-maximizing price to charge a Texan for a car wash?
  3. What is the profit-maximizing price to charge a non-Texan for a car wash?

Reference no: EM132489361

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