Answered: find the price elasticity of demand for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In one month, a beef burger restaurant sold 2,500 personal beef burger at $2.50 per pizza.

When this restaurant increased its price by 20%, its total revenue for the next month

increased to $12,500. As a result of this price increase, however, the monthly sales of

chicken meat decreased from 2,500 slices to 2,000 slices . Using the arc elasticity method,

a) find the price elasticity of demand for this restaurant’s beef burger; and
b) find the cross-elasticity of demand for chicken meat with respect to the price of

burger. Comment on your result.

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