In addition to its regular license plate, the state of Texas sells personalized “vanity” licenses for...

In addition to its regular license plate, the state of Texas sells personalized “vanity” licenses for additional fees. When the State increased the price for such plates $25 to $75, the number of people who ordered vanity plates dropped from 150,000 to 60,000

(a) Calculate the price elasticity for the vanity plate. Is it elastic?

(b) Assume the main objective of Texan government is to maximize the revenue of the state, what is the optimum price to charge to the vanity plate? What is the total revenue at that price?

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Expert Solution

Rahul Sunny answered 1 week ago

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