The city of Barlow is known for its wide variety of ice cream shops. What will...
The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick’s Ice Cream Palace raises the price of its ice cream cones?
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Demand will decrease by a greater proportion than the price. |
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Demand will increase by a greater proportion than the price. |
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The quantity demanded will decrease by a greater proportion than the price. |
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The quantity demanded will increase by a greater proportion than the price. |
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Demand will not change. |
Homework Answers
Ans.- The quantity demanded will decrease by a greater proportion than the price.
Since there are many ice-cream shops , so there are many substitutes of nick's ice cream and hence its demand will be elastic. So, if its price increases the quantity demanded will decrease by a greater proportion than the price.
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The city of Barlow is known for its wide variety of ice cream
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Lickety Split sells ice cream cones in a variety of flavours.
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$1,750
Cost of
ingredients
$640
Rent
500
Store
attendant
600
1,740
Pretax income
$10
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cones from $1.75 to $1.93 each, weekly volume would be cut to 850
cones due to competition from other nearby ice cream shops.
Estimate the profit-maximizing price per cone....
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