(Figure: Group Pricing) The diagram represents the demand and costs facing BJ's Smoothies for two different groups of consumers. What price and quantity should BJ choose for each group?

A)Group A: P = $5; Q = 200; Group B: P = $5, Q = 50
B)Group A: P = $10, Q = 200; Group B: P = $5, Q = 100
C)Group A: P = $9, Q = 50; Group B: P = $10, Q = 100
D)Group A: P = $10, Q = 100; Group B: P = $9, Q = 50

Question

(Figure: Group Pricing) The diagram represents the demand and costs facing BJ's Smoothies for two different groups of consumers. What price and quantity should BJ choose for each group?

A)Group A: P = $5; Q = 200; Group B: P = $5, Q = 50 
B)Group A: P = $10, Q = 200; Group B: P = $5, Q = 100 
C)Group A: P = $9, Q = 50; Group B: P = $10, Q = 100 
D)Group A: P = $10, Q = 100; Group B: P = $9, Q = 50

Quizplus · Accepted Answer

For Group A, the price and quantity should be set where marginal cost intersects with marginal revenue, which is at a price of $10 and a quantity of 100. 
For Group B, the price and quantity should be set where marginal cost intersects with demand, which is at a price of $9 and a quantity of 50. 
Choosing Option D satisfies both of these conditions, making it the best choice.

(Figure: Group Pricing) the Diagram Represents the Demand and Costs