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A study found that in California,

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A study found that in California, where car vanity license 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. a. Assuming vanity plates have zero production cost, was each state collecting the maximum revenue it could from vanity plates? Explain your reasoning. b. What recommendation would you have for each state to maximize revenue? c. Which state was most likely to be following a political unsupportable policy?

 

Paper#22825 | Written in 18-Jul-2015

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