The president of a small company that provides vending machine services asks you, the company's economist, to forecast changes in consumer snack purchases associated with a proposed price change. You conduct a survey and find that if the price of a snack increases from $1.00 to $ 1.25, the quantity demanded for snacks I will decrease from 56 million to 50 million. per year. Each candy cost the company $ 0.50. This is the only cost to the company. The company president expects well- written one or two short paragraphs with correct grammar, sentence structure, and an accurate understanding of economic issues. Your analysis should include a calculation of the price elasticity of demand using the mid-point formula and recommend whether the vending machine company should raise the price of snacks from $1.00 to $1.25, explaining the economic basis for your recommendation. Calculate the total revenue before the price change and after the price change. Calculate the change in the revenue after the price change.

The president of a small company that provides vending machine services asks you, the company's economist, to forecast changes in consumer snack purchases associated with a proposed price change. You conduct a survey and find that if the price of a snack increases from $1.00 to $ 1.25, the quantity demanded for snacks I will decrease from 56 million to 50 million. per year. Each candy cost the company $ 0.50. This is the only cost to the company. The company president expects well- written one or two short paragraphs with correct grammar, sentence structure, and an accurate understanding of economic issues. Your analysis should include a calculation of the price elasticity of demand using the mid-point formula and recommend whether the vending machine company should raise the price of snacks from $1.00 to $1.25, explaining the economic basis for your recommendation. Calculate the total revenue before the price change and after the price change. Calculate the change in the revenue after the price change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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