Sydney sells snow globes from a cart. When the cart is located on the sidewalk near a discount store, Sydney's customers have reservation prices of $5. When Sydney's cart is located on a sidewalk in an upscale mall, wealthier customers with reservation prices of $10 buy snow globes. Assume that Sydney can sell the same volume at either location and that marginal and average costs are $3 per globe at both locations. Total economic surplus will be maximized if Sydney:

A. sells only near the discount store and charges $5.
B. alternates between the two locations and price discriminates.
C. sells only in the upscale mall and charges $10.
D. alternates between the two locations and charges $5 at both locations.


Answer: C

Economics

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