54 695
Assignments Done
98,2%
Successfully Done
In November 2017
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Macroeconomics Question for ash

Question #41689
You are the manager of a gas station in a small town in the United States, and your goal is to maximize profits. Based on your experience, the elasticity of demand of Texans for a car wash is –2, and that of non-Texans is –1.5.Your marginal cost is $6.

What is the profit-maximizing price to charge a Texan for a car wash?
What is the profit-maximizing price to charge a Californian for a car wash?
Expert's answer
Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (ceteris paribus, i.e. holding constant all the other determinants of demand, such as income).
Ed = change in quantity/change in price, it is also the slope of the demand curve.
Profit-maximizing point is where MR = MC = $6.
So, the profit-maximizing price to charge a Texan for a car wash will be $6*2 = $12.
The profit-maximizing price to charge a Californian for a car wash will be $6*1.5 = $9.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question