You Currently Sell the Same Product to Both Professional Plumbers

question 157

Multiple Choice

You currently sell the same product to both professional plumbers and homeowners, and are able to prevent transfer from one group to the other. Your current prices, quantities sold, and the absolute values of the slopes of the demand curves are as follows: Price Number sold Slope of demand curve Plumbers $20 30 0.75
Homeowners $20 10 0.50
If your marginal cost is $10 and you are interested in maximizing your revenues, how would you adjust your prices?

• A)Increase plumbersʹ price and decrease homeownersʹ price.
• B)Decrease plumbersʹ price and increase homeownersʹ price.
• C)Increase prices for both groups.
• D)Decrease prices for both groups.

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Definitions:

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