Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is Q = 100 - 4P, where Q is the monthly quantity demanded of the bottled wine and P is the price of the bottled wine. The marginal cost per bottle of wine is $5. Suppose you have a superpower of being able to read the minds of other people so that you know the maximum price each customer is willing and able to pay for each bottle of the wine. What are the maximum profits you can get for your gas station?

Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is Q = 100 - 4P, where Q is the monthly quantity demanded of the bottled wine and P is the price of the bottled wine. The marginal cost per bottle of wine is $5. Suppose you have a superpower of being able to read the minds of other people so that you know the maximum price each customer is willing and able to pay for each bottle of the wine. What are the maximum profits you can get for your gas station?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 13P

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