In the case of the car wash, suppose that the owner wants to segment his market in terms of the willingness to pay of her customers. She thinks that segmenting the market between car owners who would pay more than $12 per car cash wash and those who would pay less than $12 is reasonable. To implement this policy she will advertise that some day of the week there will be a discount.
a. How much should she charge per car wash to the two market segments she has created so contribution is maximized?
b. Has the customers’ surplus increased or decreased? How much has the contribution increased for the car wash owner?