Hello, could you please assist me in answering the question attached. Thank you.
Answer question 2 below. 2. After seeing your analysis, Cal decides to lower the price of gas to $2.739 per gallon. After this change, the volume Quantity Price sold increased to 4,400 gallons per day. He asks you to measure his business gains or losses as a result of this price 3600 change. Fixed costs are $250 per day. 4400 Average Average What is the price elasticity of demand? 4000 0 Can the demand be characterized as price elastic, price inelastic, or neither? By how much did revenues increase or decrease as a result of the change in price? change " change Elasticity of Demand By how much did profits increase or decline? ( Profits are revenue minus all costs.) Elasticity: By how much did revenues increase or decrease as a result of the change in price? By how much did profits increase or decline? Gallons sold Variable Cost per day Price Revenue (price x gallons) Cost per Gallon (cost per unit | Fixed cost per day |Total Cost (Fixed + Daily Profit x volume) Variable) (revenue - all costs 3600 400 3. After seeing the result (from question 2), Cal decides to lower his price once again to $2.729 per gallon. Once Answer question 3 below. again, volume sold increases and settles at 4,800 gallons per day. He is worried that any further price cut will cause Quantity Price the discount station across the street to also lower it price. 4400 4800 What is the price elasticity of demand? Average Average Can the demand be characterized as price elastic, price inelastic, or neither? 4600 0 By how much did revenues increase or decrease as a result of the change in price? change %% change Elasticity of Demand By how much did profits increase or decline? (Profits are revenue minus all costs.) Elasticity: By how much did revenues increase or decrease as a result of the change in price? By how much did profits increase or decline? Gallons sold Variable Cost Daily Profit per day Price Revenue (price x gallons) Cost per Gallon (cost per unit | Fixed cost per day Total Cost (Fixed + x volume) Variable) (revenue - all costs 4400 4800 4. Cal's son is studying in the MBA program at UMUC. He tells his father that profit maximization occurs when Profit Maximization marginal cost (MC) = marginal revenue (MR). Cal understands that his marginal cost is the same as his variable cost, or $2.649 per gallon. Technically, marginal cost is the added cost from selling one more gallon. Gallons sold Variable Cost Daily Profit per day Price Revenue (price x gallons) Cost per Gallon (cost per unit | Fixed cost per day Total Cost (Fixed + x volume) Variable) (revenue - all Cal asks you for a chart to show how profits vary with sales volume, assuming that he sells an additional 400 costs gallons for each 1 cent decrease in price. Also, he wants to know by how much he can lower his price without 3600 $ losing money. 4000 S 2.749 Supply and Demand Graph Profit Maximization
