I intend to sell food coupons from my restaurant to two groups of customers, namely, general consumers and students, whose demand curves are given by Qg and Q, respectively, Qg=500 -5P Q₁ = 200 - 4P; where Q stands for quantity demanded and P is price. (a) Can you graph the two demand curves with P on the vertical axis and Q on the horizontal axis? If I price the coupons at $35, can you identify the quantity demanded by each group? (b) Also, find the price elasticity of demand for each group at the current price and quantity. (c) Am I maximizing my revenue by charging $35 for each coupon? Explain. (d) What price should I charge from each group if I want to maximize the revenue collected from coupon sales? (e) Normally, sellers try to maximize profits instead of revenue. In this case, explain if maximizing revenue is equivalent to maximizing profits
I intend to sell food coupons from my restaurant to two groups of customers, namely, general consumers and students, whose demand curves are given by Qg and Q, respectively, Qg=500 -5P Q₁ = 200 - 4P; where Q stands for quantity demanded and P is price. (a) Can you graph the two demand curves with P on the vertical axis and Q on the horizontal axis? If I price the coupons at $35, can you identify the quantity demanded by each group? (b) Also, find the price elasticity of demand for each group at the current price and quantity. (c) Am I maximizing my revenue by charging $35 for each coupon? Explain. (d) What price should I charge from each group if I want to maximize the revenue collected from coupon sales? (e) Normally, sellers try to maximize profits instead of revenue. In this case, explain if maximizing revenue is equivalent to maximizing profits
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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