A Careful Analysis of Demand for Bubbles in Strasburg, North

question 15

Multiple Choice

A careful analysis of demand for Bubbles in Strasburg, North Dakota, reveals a strange segmentation in the market.(Recall Bubbles is the beverage which produces an unexplained craving for Lawrence Welk's music.It is produced by the process Q = min{R/3, W }, where R is the number of pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = $1, P_W = $5.) If demand for Bubbles by senior citizens is described by Q₀ = 500P^-3/2while demand by those under 65 years old is Q_y=50P^-5, how should Bubbles be priced to maximize profits?

• A)$24 for senior citizens and $10 for those younger
• B)$12 for senior citizens and $40 for those younger
• C)$8 for senior citizens and $26.67 for those younger
• D)$11.56 for all citizens of Strasburg
• E)$45 for senior citizens and $18.75 for those younger

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks or bonds.

Financial Management

The strategic planning, organizing, directing, and controlling of financial undertakings in an organization or an institute.

Initial Capital Requirements

The amount of funds required to start a business, covering costs such as land, buildings, equipment, inventory, and working capital.

Assets

Any resource that a business owns and expects to use to its benefit.