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    Marginal Cost

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    I need clarification

    The price elasticity of demand for senior citizens purchasing coffee from the coffee shop is -5 while non senior citizens have a price elasticity of demand equal to -1.25. If it cost the coffe shof $0.02 to produce a coffee, the optimal price for a cup of coffee for senior citizens and resultant marginal cost under third-degree price discrimination are, respectively,
    A. $0.016 and $0.20
    B. $0.02 and $0.80
    C. $0.025 and $0.02
    D. $0.10 and $0.02

    please show calculations

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    Solution Summary

    Marginal Cost is emphasized.