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 senior citizens and the resultant marginal cost under third-degree price discrimination are, respectively:
A. $0.025 and $0.02.
B. $0.02 and $0.80.
C. $0.016 and $0.20.
D. $0.10 and $0.02.
Answer: A
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The similarity between markets for common resources and markets with externalities is that:
A. the equilibrium quantity is too high in terms of society. B. the price that competitive firms charge does not capture the true costs and benefits of consumption. C. government involvement is needed to reach an efficient outcome. D. generally we get an oversupply at market.
(Ref 6-4 Table: The Market for Chocolate-Covered Peanuts) Use Table: The Market for Chocolate-Covered Peanuts. The equilibrium quantity and the equilibrium price are _____ bags per month and _____.
A. 175; $0.60
B. 140; $0.40
C. 175; $0.80
D. 210; $0.50
Which of the following is the best example of a voluntary export restraint?
A) a limit imposed by the U.S. government on the number of cell phones that the United States can import from Korea B) a subsidy granted by the U.S. government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers C) a limit set by the Korean government on the number of cell phones that the United States can import from Korea. D) a $50 per-cell phone fee imposed on all cell phones imported into the United States
The amount by which the burden of a tax exceeds the total revenue collected is called
A. undue burden. B. tax incidence. C. excess burden. D. neutrality.