Chelsea Izkowski owns a fast food restaurant named Mickey Doodle's Burgers. She recently took a course in managerial economics and is eager to apply her knowledge to the management of her business. She decides to estimate the price elasticity (EP) and income elasticity (EI) of demand for DoodleBurgers and the cross-price elasticity (EDF) of demand for DoodleBurgers with respect to the price of FiddleBurgers, her chief competitor. In order to estimate these elasticities, she collects the information that is listed in the table below, where Q is the quantity of DoodleBurgers sold in a week, PD is the price of a DoodleBurger during the week, I is per capita annual income, and PF is the price of a FiddleBurger during the week. Use this information to calculate the arc price, income, and cross-price elasticities of demand for DoodleBurgers. Q 1,000 1,100 983 831 PD $1.20 $1.20 $1.20 $1.40 I $10,000 $10,000 $11,000 $10,000 PF $1.00 $1.10 $1.00 $1.00

Chelsea Izkowski owns a fast food restaurant named Mickey Doodle's Burgers. She recently took a course in managerial economics and is eager to apply her knowledge to the management of her business. She decides to estimate the price elasticity (EP) and income elasticity (EI) of demand for DoodleBurgers and the cross-price elasticity (EDF) of demand for DoodleBurgers with respect to the price of FiddleBurgers, her chief competitor. In order to estimate these elasticities, she collects the information that is listed in the table below, where Q is the quantity of DoodleBurgers sold in a week, PD is the price of a DoodleBurger during the week, I is per capita annual income, and PF is the price of a FiddleBurger during the week. Use this information to calculate the arc price, income, and cross-price elasticities of demand for DoodleBurgers. Q 1,000 1,100 983 831 PD $1.20 $1.20 $1.20 $1.40 I $10,000 $10,000 $11,000 $10,000 PF $1.00 $1.10 $1.00 $1.00

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

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 7E

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