Price effects-changes in elasticity of demand

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You decided to open a restaurant, named FunMeal. FunMeal is a fast food restaurant with a very limited menu. It serves only a steak sandwich on a whole-wheat roll plus a salad with any beverage of the customer's choice. Normally the sandwich, salad and beverage meal sells for $12.00 and the average number of meals sold per month is 7,000 But FunMeals would like to increase its volume, so this month it cut the price to $10.00 With the price cut the sales volume of meals increased to 8,000

A) What is FunMeals elasticity of demand? Is demand elasticity, inelastic, or neither?

B) Given the price elasticity of demand, would FunMeals be willing to sell at the following rate: FunMeal would be willing to sell this many per month 10,000 Provided that the average price per meal is $14.00

Reference no: EM1366981

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