Question
A diner has no competition when it comes to its famous Reuben sandwich combo plate, for which the graph shows the diner's demand (D), marginal
A diner has no competition when it comes to its famous Reuben sandwich combo plate, for which the graph shows the diner's demand (D), marginal cost (MC), and marginal revenue (MR) curves. The price of $20 is based on the MR = MC rule for profit maximization. The rectangular region shown represents thenet revenuefrom sales of the sandwich (total revenue from Reuben combo sales minus total variable costs associated with Reuben combo sales). Now, suppose the diner decides to raise the price during the lunch hour, which accounts for 60% of Reuben combo sales, knowing that its lunch-hour patrons are the most loyal buyers of the Reuben combo and also that they are locked into the lunchtime slot by their work schedules. The diner raises the price just enough not to lose any lunch-hour buyers. Use the area tool to outline the region representing the resultingadditionalnet revenue from the price increase. To refer to the graphing tutorial for this question type, please click here.
Price ($) 32 30 28 26 24 22 20 18 16 14 12 MC 10 A D MR O O UPStep by Step Solution
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