A fried chicken franchise finds that the demand equation for its new roast chicken product, "Roasted Rooster," is given by 36 D0.85 q = where p is the price (in dollars) per quarter-chicken serving and q is the number of quarter-chicken servings that can be sold per hour at this price. Find E(p) E(p) = Find the price elasticity of demand when the price is set at $4.50 per serving. At a price of $4.50, a 1% increase in price leads to a X % decrease in demand. Interpret the result. At a price of $4.50, the demand is inelastic They should raise the price per serving in order to increase revenue.
A fried chicken franchise finds that the demand equation for its new roast chicken product, "Roasted Rooster," is given by 36 D0.85 q = where p is the price (in dollars) per quarter-chicken serving and q is the number of quarter-chicken servings that can be sold per hour at this price. Find E(p) E(p) = Find the price elasticity of demand when the price is set at $4.50 per serving. At a price of $4.50, a 1% increase in price leads to a X % decrease in demand. Interpret the result. At a price of $4.50, the demand is inelastic They should raise the price per serving in order to increase revenue.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 7E: In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price...
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Transcribed Image Text:A fried chicken franchise finds that the demand equation for its new roast chicken product, "Roasted Rooster," is given by
36
q =
p0.85
where p is the price (in dollars) per quarter-chicken serving and q is the number of quarter-chicken servings that can be sold per hour at this price. Find E(p)
E(p) =
Find the price elasticity of demand when the price is set at $4.50 per serving.
At a price of $4.50, a 1% increase in price leads to a
X % decrease in demand.
Interpret the result.
At a price of $4.50, the demand is inelastic
They should raise
the price per serving in order to increase revenue.
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