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The Burrito Barn is considering a price reduction on the Firegut Burrito. Giuseppe, the proprietor of Burrito Barn, has recorded sales data at different price levels over the last year. He is quite confident that no other demand factors, such as consumer income or competitor pricing, have significantly changed during this time period.

Price per Burrito Weekly Sales
$6.25 305
$6.00 321
$5.75 348
$5.50 392

a. Is burrito demand more elastic in the $6.25-$6.00 range or in the $6-$5.75 price range? Justify your answer using the price elasticity estimator for each price range.

b. If the current price is $6.20 and the owner is considering a price decrease of 2.5 percent, what can you project for a percent change in weekly burrito revenue?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9495197

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