Question

As the owner of Barney’s Broilers—a fast-food chain—you see an increase in the demand for broiled chicken as consumers become more health conscious and reduce their consumption of beef and fried foods. As a result, you believe it is necessary to purchase another oven to meet the increased demand. To finance the oven you go to the bank seeking a loan. The loan officer tells you that your revenues of $750,000 are insufficient to support additional debt. To qualify for the loan, Barney’s Broilers’s revenue would need to be $50,000 higher. In developing a strategy to generate the additional revenue, you collect data on the price (in cents) per pound you charge customers and the related quantity of chicken consumed per year in pounds. This information is contained in the excel file link below. Use these data and a log-linear demand specification to obtain least squares estimates of the demand for broiled chicken.

Excel Data File

Write an equation that summarizes the demand for broiled chicken.

Instructions: Enter your response rounded to two decimal places.

ln Q =  -  ln P

Determine the percentage price change that is needed in order to boost revenues by $50,000.

Instructions: If the change is a decrease, enter a negative. Enter your response rounded to one decimal place.

Percentage price change needed in order to boost revenues by $50,000

In (Quantity)lIn (Price) 0.85 0.95 1.04 1.08 1.15 1.18 1.20 1.23 1.30 1.32 2.38 2.36 2.34 2.33 2.28 2.30 2.23 1.34 1.36 1.36 1.40 1.38 1.45 1.48 1.48 1.49 1.52 1.56 1.56 1.57 1.56 1.56 1.56 1.58 1.59 1.62 1.66 1.65 1.67 2.20 2.18 2.12 2.11 2.08 2.11 2.09 2.04 2.05 2.08 2.04 2.04 2.04 2.00 1.99 2.00 2.11 2.04 2.05 2.00 1.95 1.96 1.95 1.93 1.88 1.85 1.83 1.85 1.78 1.83 1.78 1.81 1.82 1.78 1.68 1.69 1.72 1.74 1.75 1.77 1.79 1.82 1.84

Answer 1