When American Airlines decided to review new ideas aimed at first-class passengers on very long flights, like an ultra high-spee
1 answer:
You might be interested in
Answer: (1) 700 pizzas
(2) Its revenue increases by $2600.
Explanation:
Given that,
price elasticity of demand for his pizza = -4
Percentage change in price = 10%
Initial Quantity, = 500 Pizzas
Elasticity of demand =
-4 =
= -4 × 0.1
= 0.4
= 0.4
∴ = 700
Initial price, = $20
Changed price, = $18
Revenue at t = 0
= 500 × 20 =$10000
Revenue at t = 1
= 700 × 18 = $12600
Therefore, from the above calculations it was seen that his revenue increases by ($12600 - $10000)= $2600 and its sales increases to 700.