Alocal pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each. suppose the owner of the pizzeria tells you that the price elasticity of demand for his pizza is -4, and he asks you for advice. he wants to know two things. first, how many pizzas will he sell if he cuts his price by 10%? second, how will his revenue be affected?

(1) 700 pizzas

(2) Its revenue increases by $2600.

Explanation:

Given that,

price elasticity of demand for his pizza = -4

Percentage change in price = 10%

Initial Quantity, = 500 Pizzas

Elasticity of demand =

-4 =

= -4 × 0.1

= 0.4

= 0.4

∴ = 700

Initial price, = $20

Changed price, = $18

Revenue at t = 0

= 500 × 20 =$10000

Revenue at t = 1

= 700 × 18 = $12600

Therefore, from the above calculations it was seen that his revenue increases by ($12600 - $10000)= $2600 and its sales increases to 700.

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

just took it 100%

answer: marginal utility of the fourth brownie is 0.

explanation: marginal utility is the addtional utility gained from the consumption of one more unit of a good. it is given by,

so, marginal utility at the 4th unit will be given by

since, the values are not given here, you can simply find marginal utility at fourth unit by subtracting total utility at 3rd unit from total utility at 4th unit.