Consider the CEO of a company that sells coffee at small free standing shops around the country. The Board of Directors is considering increasing the number of locations in an effort to increase total revenue, ceteris paribus. Use the data to determine f revenue is responsive to the number of locations. Use the midpoint method to calculate percentages. Number of locations Total revenue 2012 3000 $90 million 2013 3750 $112.5 million
Consider the CEO of a company that sells coffee at small free standing shops around the country. The Board of Directors is considering increasing the number of locations in an effort to increase total revenue, ceteris paribus. Use the data to determine f revenue is responsive to the number of locations. Use the midpoint method to calculate percentages. Number of locations Total revenue 2012 3000 $90 million 2013 3750 $112.5 million
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Based on the CEO's analysis, he reports to the Board that:
*total revenue is unit elastic with respect to the number of locations.
*total revenue is inelastic with respect to the number of locations.
*total revenue is elastic with respect to the number of locations.
Transcribed Image Text:Consider the CEO of a company that sells coffee at small free standing shops around the country. The Board of Directors is
considering increasing the number of locations in an effort to increase total revenue, ceteris paribus. Use the data to determine
if revenue is responsive to the number of locations. Use the midpoint method to calculate percentages.
Number of locations
Total revenue
2012
3000
$90 million
Calculate the percentage change in locations.
Calculate the percentage change in total revenue.
2013
3750
$112.5 million
percentage change in total revenue:
percentage change in locations:
%
%
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