Question

about increasing a which is currentibue would fall by ab conomist to figure fifty-six thousand 3.846 percent Question 2: Donna Mia's is currently selling their dinner specials for $13.00 each. The restaurant is thinking about increasing that price by $2.00. They hired an economist to out how that would affect total revenue which is currently one hundred and fifty-six the dollars a month. The economist estimated that total revenue would fall by about 3.846 1. What is the price elasticity of demand over the relevant range? B. How many dinners will be sold at the new price? C. Explain why this would/would not be a good idea. You must use the elasticity coefficient (explain what the number means), total revenue, and what you know about price elasticity of demand to support your answer. D. Graph this problem. Price 0.0 + 0.0 Quantity

Answer 1

prince = $13 Current revenue z $ 156,600 12 qty. sold = 156,000 3 12,000 units . If price increased increased to $15 to $15 he, $2 increase revenue fall by 3.8464. let aty sold a8% = 15x22 - 12000x13 - 083846 - 12000X13 31522 = 156.000 (160.03846) 9, 150,000 Pt of demand 192 = 10,000 Osing midpoint method units. = Aa -8000 4492 mi 337 14 1.272 AP Pitle 28ly (10,000 units) © IPE of demend/ is al hence qty increases otor) decreases at a greater rate then price & hence revenue would decrease if price is increased & increase if price is decreased Total revenue is also said to be decreasing, - - price a 20.000 5ioet 09 0