CH14-Q4)

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La Cabane Sucre is a shop located in Quebec. It makes and sells taffy in a variety of flavours, including the local favourite, tire d'rable. Revenue and cost data for a recent week appear here: Revenue (1,470 kg and $6 per kg) $8,820 Cost of ingredients $2,205 Rent 860 Wages 3,330 6,395 Pretax income $2,425 All employees work standard shifts, regardless of how much taffy is produced or sold. Jasmine, the shop's manager, estimates that if she were to decrease the price of taffy by $0.60 per kilogram to a new price of $5.40 per kilogram, weekly volume would increase by 20%. (a) Calculate the price elasticity of demand. (Round intermediate calculations to 4 decimal places, eg, 0.2468 and final answers to 3 decimal places, e.g. 5.125. Show a negative answer preceded by a minus sign, e.g.-500 or in parenthesis, e.g. (500).) Elasticity Calculate the profit-maximizing price. (Round entry to 2 decimal places, e.g. 15.25.) Profit-maximizing Price La Cabane Sucre is a shop located in Quebec. It makes and sells taffy in a variety of flavours, including the local favourite, tire d'rable. Revenue and cost data for a recent week appear here: Revenue (1,470 kg and $6 per kg) $8,820 Cost of ingredients $2,205 Rent 860 Wages 3,330 6,395 Pretax income $2,425 All employees work standard shifts, regardless of how much taffy is produced or sold. Jasmine, the shop's manager, estimates that if she were to decrease the price of taffy by $0.60 per kilogram to a new price of $5.40 per kilogram, weekly volume would increase by 20%. (a) Calculate the price elasticity of demand. (Round intermediate calculations to 4 decimal places, eg, 0.2468 and final answers to 3 decimal places, e.g. 5.125. Show a negative answer preceded by a minus sign, e.g.-500 or in parenthesis, e.g. (500).) Elasticity Calculate the profit-maximizing price. (Round entry to 2 decimal places, e.g. 15.25.) Profit-maximizing Price