Kate owns a food truck. She divides her potential customers into two groups and gives discount coupons to the one she thinks are especially price sensitive. How should she set the price for each group? Kate should consider the _____ for each group separately and then choose each group's price _____.

Question

Quizplus · Accepted Answer

Kate should use the demand curve to set the price for each group separately. For the group that is price sensitive, she should set the price at the point on the demand curve where marginal cost equals marginal revenue. For the other group, she should set the price based on their willingness to pay, which can also be found on their demand curve where marginal cost equals marginal revenue. This will allow her to maximize profit for both groups.

Kate Owns a Food Truck