Sydney sells snow globes from a cart.When the cart is located on the sidewalk near a discount store,Sydney's customers have reservation prices of $5.When Sydney's cart is located on a sidewalk in an upscale mall,wealthier customers with reservation prices of $10 buy snow globes.Assume that Sydney can sell the same volume at either location and that marginal and average costs are $3 per globe at both locations.
Maximization of total economic surplus indicates that Sydney should
A) alternate between the two locations and price discriminate.
B) sell only near the discount store and charge $5.
C) sell only in the upscale mall and charge $10.
D) alternate between the two locations and charge $5 at both locations.
Correct Answer:
Verified
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