The only gas station in a small town sells both regular and premium gasoline. The weekly demand functions for the two gasolines are Qdregular = 10,000-1,000 Pregular+50 Ppremium Qdpremium = 350 + 50 Pregular-100Ppremium where quantities are measured in gallons and prices in dollars per gallon. If the price of regular gas is $3.70 per gallon, its marginal cost is $2.95, and the marginal cost of premium is $3.75, what is the profit - maximizing price of premium gas?

The only gas station in a small town sells both regular and premium gasoline. The weekly demand functions for the two gasolines are Qdregular = 10,000-1,000 Pregular+50 Ppremium Qdpremium = 350 + 50 Pregular-100Ppremium where quantities are measured in gallons and prices in dollars per gallon. If the price of regular gas is $3.70 per gallon, its marginal cost is $2.95, and the marginal cost of premium is $3.75, what is the profit - maximizing price of premium gas?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2.5CE

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