In one month, a Pizza Hut restaurant sold 3,500 personal pizzas at $3.50 per pizza. When this restaurant increased
its price by 20%, its total revenue for the next month increased to $13,440. As a result of this price increase, however, the monthly sales of pop decreased from 3,500 cans to 3,000 cans. A) Find the price elasticity of demand for this restaurant's pizzas. B) Find the cross elasticity of demand for pop with respect to the price of pizzas. Comment on your results.
A) Before the price increase: price = $3.50 and Quantity demanded = 3500, After the price increase: Price = $3.50*1.20 =... View the full answer