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You Are the Manager of a Gas Station in a Small

question 78

Essay

You are the manager of a gas station in a small town, and your goal is to maximize profits. Based on your experience, the elasticity of demand of Texans for a car wash is -2, while that of non-Texans is -1.5. Your marginal cost is $6.
a. Are the conditions necessary for price discrimination to be an effective means of enhancing profits being met? Explain.
b. What is the profit-maximizing price to charge a Texan for a car wash?
c. What is the profit-maximizing price to charge a Californian for a car wash?


Definitions:

Incomplete Disposition

The failure to fully deal with or dispose of an asset or a legal matter.

Trust Property

Refers to assets held in a trust, managed by a trustee on behalf of the beneficiaries of the trust according to the terms of the trust agreement.

Resulting Trust

A trust that is implied by law to effectuate the presumed intention of the parties involved, often arising when a property transfer does not fit the characteristics of an express trust.

Settlor's Intent

The purpose or intention expressed by a settlor when creating a trust, directing how the trust assets should be managed and distributed.

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