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
You might also like to view...
The work of Roger Ransom has shown that the burden of the Navigation Acts on colonial trade to continental Europe
a. was disproportionately large on the Southern colonies. b. amounted to 5 percent of colonial income. c. amounted to less than one percent of colonial income. d. Both a and b are correct. e. Both a and c are correct.
The term "satisficing" indicates an optimal choice
a. True b. False Indicate whether the statement is true or false
GDP includes:
A. intermediate but not final products. B. substitute but not intermediate products. C. final but not intermediate products. D. complementary but not intermediate products.
The responsiveness of quantity demanded of a good to changes in its price is the
A) cross elasticity of demand. B) quantity elasticity of price. C) income elasticity. D) price elasticity of demand.