The price elasticity of demand for senior citizens purchasing coffee from McDonald's is ?5, while non-senior citizens have a price elasticity of demand equal to ?1.25. If it costs McDonald's $0.02 to produce a coffee, the optimal price for a cup of coffee for non-senior citizens and the resultant marginal cost under third-degree price discrimination are:
A. $0.10 and $0.02.
B. $0.004 and $0.02.
C. $10 and $0.20.
D. $0.02 and $0.80.
Answer: A
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