# What would be the Price Elasticity of Demand if Shaun is correct?

What would be the Price Elasticity of Demand if Shaun is correct?.

Shaun suggests that there wasnt enough time in the experiment. He estimates that in the second mont Show more Shaun suggests that there wasnt enough time in the experiment. He estimates that in the second month April the Caf will sell 26000 meals at \$7.50. Please answer the following assuming that Shaun is correct. You want to get an idea of what will happen to profits before you commit to an action. If profits go up when Shaun is correct then you will keep the current price of \$7.50. a. What would be the Price Elasticity of Demand if Shaun is correct? b. Is elasticity elastic inelastic or neither? c. What does this mean and why does it matter? d. Will Revenues increase or decrease as a result of the price cut at 26000 meals? By how much? e. Beatrice has calculated the fixed costs for the Caf are \$18000 per month and each meal costs \$4.50. Will profits go up or down as a result of the price cut if Mt. Claire sells 26000 meals? By How much? Show less

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