Answered: The Dixie Chicken currently sells 3,000…

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

The Dixie Chicken currently sells 3,000 burger platters per month for $8, and the own-price
elasticity for this platter has been estimated to be -1.25. If Dixie Chicken raises prices by 75
cents, how many platters will be sold? Round to the nearest whole number.

Expert Solution

Step 1

Price elasticity of demand (E_d) depicts the nature of responsiveness of the quantity demanded (Q) of a good or service to a change in its price (P). It is calculated as the percentage (%) change in Q divided by the percentage (%) change in P.

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