The Hevishus Corp. (HC) is a profit-maximizing company that owns the only cement factory in Charleston, South Carolina, and is the only seller of cement in that area; it also owns the only cement plant in Portland, Oregon, and is the only seller of cement there. 1. Its statistician-consultant has determined that the elasticity of demand for cement in Portland is -3.50 and in Charleston is -2.25, and HC has priced its cement in accordance with this information. In which city does it charge a higher price for cement? Explain. 2. The mayor of Portland has levied a $250,000 annual factory fee on any cement factory in the city. Though it is not happy about the fee, HC pays it and continues producing and selling cement in Portland. How will the fee affect the price of cement that HC sells in Portland? Explain.
The Hevishus Corp. (HC) is a profit-maximizing company that owns the only cement factory in Charleston, South Carolina, and is the only seller of cement in that area; it also owns the only cement plant in Portland, Oregon, and is the only seller of cement there.
1. Its statistician-consultant has determined that the
2. The mayor of Portland has levied a $250,000 annual factory fee on any cement factory in the city. Though it is not happy about the fee, HC pays it and continues producing and selling cement in Portland. How will the fee affect the price of cement that HC sells in Portland? Explain.
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