**Problem 13: Determining Optimal Pricing for Self-Driving Cars**You have recently acquired a patent for the first commercial self-driving car. Below is a table showing the elasticity of demand and the marginal cost of production for your cars across different production centers worldwide. Assuming these values are constant, can you estimate the optimal pricing for your cars?| City | Marginal Cost | Elasticity | Price ||-------------------------------|---------------|------------|--------------|| Wolfburg, Germany | $20,000 | -1.5 | $60,000.00 || Barcelona, Spain | $18,000 | -4.0 | $24,000.00 || Tokyo, Japan | $22,000 | -3.0 | $33,000.00 || Ulsan, South Korea | $16,000 | -2.0 | $32,000.00 || East London, South Africa | $10,000 | -8.0 | $11,428.60 || Mexico City, Mexico | $12,000 | -6.0 | $14,400.00 |**Explanation of Terms:**- **City:** The location of the production center.- **Marginal Cost:** The cost of producing one additional unit of the self-driving car.- **Elasticity:** The price elasticity of demand, which measures how sensitive the quantity demanded is to a change in price.- **Price:** The proposed optimal price for the car in that location.**Graphical/Diagram Explanation:**There are no graphs or diagrams included in this problem.

Elasticity of demand for a good is an indicator of the sensitivity of the same towards price.…

You just got a patent for the first commercial self-driving car. The following table show the elasticity of the demand and the marginal cost of production of your cars in severa production centers across the globe. Assuming that this are constant, can you approximat what would be the optimal price for your cars? City Marginal Cost Elasticity Price Wolfburg, Germany Barcelona, Spain Tokyo, Japan Ulsan, South Korea East London, South Africa Mexico City, Mexico $20, 000 $18, 000 $22, 000 $16, 000 $10, 000 $12, 000 $60, 000.00 $24, 000.00 $33, 000.00 $32,000.00 $11, 428.60 $14, 400.00 -1.5 -4.0 -3.0 -2.0 -8.0 -6.0

You just got a patent for the first commercial self-driving car. The following table show the elasticity of the demand and the marginal cost of production of your cars in severa production centers across the globe. Assuming that this are constant, can you approximat what would be the optimal price for your cars? City Marginal Cost Elasticity Price Wolfburg, Germany Barcelona, Spain Tokyo, Japan Ulsan, South Korea East London, South Africa Mexico City, Mexico $20, 000 $18, 000 $22, 000 $16, 000 $10, 000 $12, 000 $60, 000.00 $24, 000.00 $33, 000.00 $32,000.00 $11, 428.60 $14, 400.00 -1.5 -4.0 -3.0 -2.0 -8.0 -6.0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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