A local pizza shop owner decides to hire an economic consultant to help him set his prices. Currently, one slice of pizz

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A Local Pizza Shop Owner Decides To Hire An Economic Consultant To Help Him Set His Prices Currently One Slice Of Pizz 1 (111.75 KiB) Viewed 18 times

A local pizza shop owner decides to hire an economic consultant to help him set his prices. Currently, one slice of pizza costs $2 and the store sells about 800 slices per week. The pizza shop's current revenue from sales is equal to $ The economic consultant estimates that the price elasticity of demand is equal to -0.25, and suggests that the shop owner should increase the price of a slice of pizza by $0.50; that is, the consultant recommends increasing the price of pizza by %. The consultant claims that doing so would by would be % or ◆ the number of slices sold slices. As a result, the economist predicts that the new revenue Thus as a result of the increase in the price there is to the fact that the pizza shop owner was operating on the demand curve. in revenue. This is due portion of the