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How much do need to change the price

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You are the manager for Dunkin Donuts and know the following elasticities:

n=1.5 n1= 1.2 nxy1= 0.5 nxy2= -0.5

N is the price elasticity of demand for Dunkin Donuts (DD) glazed doughnuts. Nxy1 is the cross elasticity of demand between DD glazed and Krispy Kreme (KK) glazed doughnuts. Nxy2 is the cross elasiticy of demand between DD glazed doughnuts and DD French Vanilla coffee, and n1 is the income elasticity of DD glazed doughnuts.

Question 1: If you want to increase the sales of your glazed donuts by 30%, in what direction and by how much do you need to change the price?

Reference no: EM132540685

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