Internet Service in the Local Market Is Supplied by Laura's

question 85

Essay

Internet service in the local market is supplied by Laura's Internet Service. Laura has two types of consumers. The first type of customers is local businesses, and the elasticity of business demand at current prices and quantity is -1.25. The second type is residential customers, and the elasticity of residential demand at current prices and quantity is -4. Laura is charging business users $50 per unit of service while she charges residential customers $17.50 per unit. Can we determine if Laura is maximizing profits?

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Definitions:

Location

The physical place where a business is situated, which can significantly impact its success due to factors such as accessibility, market presence, and competition.

Business Valuation

The process of determining the overall economic value of a business entity, considering factors such as market conditions, assets, liabilities, and earning potential.

Industry

The categorized group of companies that are involved in the production of goods or delivery of services in a specified sector of the economy.

Word-of-Mouth

The informal exchange of information between individuals about the merits of products, services, or events.