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A Sand and Gravel Company Sells Pea Gravel

Question 99

Multiple Choice

A sand and gravel company sells pea gravel. It faces two types of customers with the following inverse demand curves:
Type A: P = 3.5 - 0.002Q
Type B: P = 3 - 0.001Q
Where Q measures bags of pea gravel and P is the price per bag. The marginal cost is $0.50 per bag. Suppose the business wants to use discounting to price discriminate. The consumer surplus for Type B consumers with the regular price (no price discount) is $____.


A) 1,093.75
B) 750.00
C) 625.00
D) 562.50

Correct Answer:

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