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Discuss the scenarios below. Please treat each scenario separately. (i) You are the manager of a local restaurant. You notice that when you lower the price of your meals, your total revenue rises. What conclusion can you draw about the demand for your restaurant's meal?

Discuss the scenarios below. Please treat each scenario separately. (i) You are the manager of a local restaurant. You notice that when you lower the price of your meals, your total revenue rises. What conclusion can you draw about the demand for your restaurant's meal?

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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Discuss the scenarios below. Please treat each scenario separately. (i) You are the manager of a local restaurant. You notice that when you lower the price of your meals, your total revenue rises. What conclusion can you draw about the demand for your restaurant's meal? (ii) For a car manufacturing industry, why does the elasticity of supply generally increase as more time passes after a price change? (iii) Over 20 years period, tuition fees at a university have increased by 60%. At the same time, the number of students enrolled for the courses at the same university had increased from 20,000 to over 32,000. Based on the Law of demand, when a price of a product increases the demand for the same product will reduce. Based on the scenario of the university, do you think the law of demand is untrue? Please explain your conclusion using appropriate graphs.
Transcribed Image Text:Discuss the scenarios below. Please treat each scenario separately. (i) You are the manager of a local restaurant. You notice that when you lower the price of your meals, your total revenue rises. What conclusion can you draw about the demand for your restaurant's meal? (ii) For a car manufacturing industry, why does the elasticity of supply generally increase as more time passes after a price change? (iii) Over 20 years period, tuition fees at a university have increased by 60%. At the same time, the number of students enrolled for the courses at the same university had increased from 20,000 to over 32,000. Based on the Law of demand, when a price of a product increases the demand for the same product will reduce. Based on the scenario of the university, do you think the law of demand is untrue? Please explain your conclusion using appropriate graphs.
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