Sparkling Water Co

question 89

Multiple Choice

Sparkling Water Co. has determined that, for Michigan residents, the price elasticity of demand for a case of its purified water is -3.0, while the price elasticity of demand for Florida residents is -2.5. Assume that the marginal cost is constant at $8. What price per case should Sparkling Water Co. charge Michigan and Florida customers?

• A) Customers in Michigan and Florida should be charged $16.
• B) Michigan customers should be charged $11.94 and Florida customers charged $13.33.
• C) Michigan customers should be charged $10 and Florida customers charged $14.
• D) Customers in Michigan and Florida should be charged $13.33.

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Definitions:

Components

Components are parts or elements that make up a whole system, machine, or structure.

Connective

A word or phrase in logic that connects propositions, such as "and," "or," "if...then," indicating the relationship between them.

Consistent

In a logical sense, a set of statements is consistent if they can all be true at the same time; more generally, acting or done in the same way over time.

Truth Tables

A table used in logic to determine the truth value of a compound statement based on the truth values of its components.