Sydney Sells Snow Globes from a Cart

question 95

Multiple Choice

Sydney sells snow globes from a cart. When the cart is located on the sidewalk near a discount store, Sydney's customers have reservation prices of $5. When Sydney's cart is located on a sidewalk in an upscale mall, wealthier customers with reservation prices of $10 buy snow globes. Assume that Sydney can sell the same volume at either location and that marginal and average costs are $3 per globe at both locations. Total economic surplus will be maximized if Sydney:

• A)alternates between the two locations and price discriminates.
• B)sells only near the discount store and charges $5.
• C)sells only in the upscale mall and charges $10.
• D)alternates between the two locations and charges $5 at both locations.

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Definitions:

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