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Calculate the demand for appetizers

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Reference no: EM133062830

Question - Arc price elasticity - Giovanni's Pasta Bar recently reduced appetizer prices from $12 to $10 for afternoon "early bird" customers and enjoyed an increase in sales from 85 to 120 orders per day. Beverage sales also increased from 340 to 500 units per day.

A. Calculate the demand for appetizers.

B. What would be the optimum appetizers price if the MC of appetizers was $5.00?

C. Calculate the arc cross-price elasticity of demand between beverage sales and appetizer prices.

D. Holding all else equal, would you expect an additional appetizer price decrease to $8 to cause both appetizer and beverage revenues to rise? Explain.

Reference no: EM133062830

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