The Price Elasticity of Demand for Senior Citizens Purchasing Coffee

question 106

Multiple Choice

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) $0.016 and $0.20.
• B) $0.02 and $0.80.
• C) $0.025 and $0.02.
• D) $0.10 and $0.02.

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