What is profit-maximizing price to charge for texan car wash

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Reference no: EM131108254

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.

a. Are the conditions necessary for price discrimination to be an effective means of enhancing profits being met? Explain.

b. What is the profit-maximizing price to charge a Texan for a car wash?

c. What is the profit-maximizing price to charge a Californian for a car wash?

Reference no: EM131108254

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