Question

. 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.

PR = $1, PW = $5.) If demand for Bubbles by senior

citizens is described by Q0 = 500P3/2 while demand

by those under 65 years old is Qy = 50P5, 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

Answer 1