Question

A careful analysis of demand for Bubbles in Strasburg, ND reveals a strange segmentation in the market. (RecallBubbles is the beverage which produces an unexplained craving for Lawrance Welk's music. It is produced by the process Q=min(R/4,W), where R is the number of pulverized Lawrence Welk reocrds, and W is gallons of North Dakoda well water. Pr=1, Pw=3.) if demand for Bubbles by senior citizens is described by Qo=500P^(-3/2) while demand by those under 65 years old is Qy=50P^-2, how should Bubbles be priced to maximize profits?

Ans: $21 for senior citizens, $14 for those younger

Detailed explanation will be appreciated!

Answer 1