Juan and Julie have opened a new restaurant in town, JJ's Burgers. Their burgers are quite popular, especially the Big Kahuna burger, which was written about and mentioned by a local entertainment blogger online. Juan tells Julie that since the burger is so popular, they should raise the price to make more money.

Assignment:

Prepare a formal business memo detailing and addressing the following:

1. Given what you know about price elasticity of demand, is Juan correct that a price increase would bring in more money?
2. The Big Kahuna burger sells for $10.00 and 200 are sold each week. What is JJ's total revenue from Big Kahuna burgers?
3. Juan suggests a 10 percent price increase for the Big Kahuna burger, raising the price to $11.00. After the price change, JJ's sells 160 Big Kahuna burgers a week. What is the percentage changed in the quantity demanded after the price change?
4. What is the price elasticity of demand for JJ's Big Kahuna? Use the price elasticity formula to determine the elasticity coefficient.
5. What is JJ's total revenue after the price increase? Using the total revenue approach, is the price elasticity of demand for JJ's Burgers elastic or inelastic? How do you know?
6. Discuss additional options JJ's Burgers has for raising revenue.