Calculate the elasticity of supply-what will be the revenue

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Reference no: EM13994582

The owners, see that after seeing the change in profits from the price decrease in March. They go back to a price of $8.50 and sell 21,000 meals in April. They decide that they are only willing to produce 21,000 meals at a price of $8.50. However, if they raised price to $9.50 per meal, they would be willing to produce 30,000 meals.

Calculate the Elasticity of Supply. Is it elastic or inelastic?

How many meals will Mt. Claire Café sell at $9.5 each? Hint: you can only sell what customers will buy. Use the original the elasticity of demand calculated in 1 above.

What will be the Revenue?

What will be the Profit?

Should Mt. Claire Café raise the price to $9.50? Why or why not?

What did you learn from this case? Post your response to this question in the discussion area.

Reference no: EM13994582

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