3. Suppose you own a small Pizza shop. You currently charge 30 dirham per dinner foreveryone who comes to your shop. Your friend who took an economics course in collegetells you that there may be a way to increase your total revenue. Given the demandcurves shown, answer the following questions. Show calculations when possible.+++20P+PexcantityGiven the graphs and what your friend knows about economics, he recommends youdecrease theprice from 30 to 20 dirham. Calculate the elasticity of demand and then answer thefollowing: (a) isit worth it to decrease the price or not? (b) how much could you increase total revenue ifyou take?his advice? Explain.

Answer: Given, Price Quantity demanded 30 (P1) 300 (Q1) 20 (P2) 400 (Q2)…

3. Suppose you own a small Pizza shop. You currently charge 30 dirham per dinner for everyone who comes to your shop. Your friend who took an economics course in college tells you that there may be a way to increase your total revenue. Given the demand curves shown, answer the following questions. Show calculations when possible. Demand → Chantay Given the graphs and what your friend knows about economics, he recommends you decrease the price from 30 to 20 dirham. Calculate the elasticity of demand and then answer the following: (a) is it worth it to decrease the price or not? (b) how much could you increase total revenue if you take? his advice? Explain.

3. Suppose you own a small Pizza shop. You currently charge 30 dirham per dinner for everyone who comes to your shop. Your friend who took an economics course in college tells you that there may be a way to increase your total revenue. Given the demand curves shown, answer the following questions. Show calculations when possible. Demand → Chantay Given the graphs and what your friend knows about economics, he recommends you decrease the price from 30 to 20 dirham. Calculate the elasticity of demand and then answer the following: (a) is it worth it to decrease the price or not? (b) how much could you increase total revenue if you take? his advice? Explain.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 29CTQ: A city has build a bridge over a river and it decides to charge a toll to everyone who crosses. For...

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