Reference no: EM133126160

Profit Maximization with no price discrimination

You are running a (small) chain of gourmet burger joints with two locations (San Antonio and Laredo)

You have been charging $9 for your burger meal (fries, burger and soft drink). Across both locations, you sell 1400 meals per week at this price

When you raised the price to $10 for the burger meal, your sales across the two locations fell to 1200 meals per week.

For your costs, you have fixed costs of $3000 per week across the two locations. In addition, it costs you three dollars per burger in variable costs (ingredients, labor etc.)

a. What is your combined cost function across the two locations

b. Using the two prices above, estimate your combined demand function across the two locations

c. Using the combined demand function from the previous question, calculate the profit maximizing price and quantity

d. What are your (combined) weekly profits across the two locations?