The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently sells for the price of $5.00. Giuseppe, the proprietor of Burrito Barn, knows the price elasticity for the Firegut is roughly equal to -2.3 over the range being considered for the price change. The Firegut has been selling at the brisk pace of 500 burritos per week. To increase market share, Giuseppe would like to increase sales to 750 per week. What price should Giuseppe set?

The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently sells for the price of $5.00. Giuseppe, the proprietor of Burrito Barn, knows the price elasticity for the Firegut is roughly equal to -2.3 over the range being considered for the price change. The Firegut has been selling at the brisk pace of 500 burritos per week. To increase market share, Giuseppe would like to increase sales to 750 per week. What price should Giuseppe set?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

3. The Burrito Barn is considering a price reduction on the
Firegut Burrito, which currently sells for the price of $5.00.
Giuseppe, the proprietor of Burrito Barn, knows the price
elasticity for the Firegut is roughly equal to -2.3 over the
range being considered for the price change. The Firegut
has been selling at the brisk pace of 500 burritos
per week.
To increase market share, Giuseppe would like to increase
sales to 750 per week. What price should Giuseppe set?

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