What recommendation would you have for each state to


University of Richmond Professor Erik Craft analyzed the states' pricing of vanity plates. He found that in California, where vanity plates cost $28.75, the elasticity of demand was 0.52. In Massachusetts, where vanity plates cost $50, the elasticity of demand was 3.52. Assuming vanity plates have zero production cost and his estimates are correct, was each state collecting the maximum revenue it could from vanity plates? describe your reasoning. What recommendation would you have for each state to maximize revenue? Assuming the demand curves were linear, graphically demonstrate your reasoning.

 

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: What recommendation would you have for each state to
Reference No:- TGS0930676

Expected delivery within 24 Hours