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please and thank you 4) (4 points) Imagine that there is a new food delivery app in Doha that is trying to rival Talabat. The
please and thank you
4) (4 points) Imagine that there is a new food delivery app in Doha that is trying to rival Talabat. The app functions like Talabat except for one major difference: the price for the delivery service is flexible. There is a standard rate charged during normal hours when demand is "normal", but when demand for service suddenly increases, they impose surge prices. Imagine that during normal hours, demand is given by QD = 15 - 2P, where P is price. And that during peak hours, demand is given by QD = 30 - 2P. Also, imagine that supply is given by Qs = P. The company is unsure what effect this surge price mechanism would have on their revenue during those peak hour times. Calculate the revenue the company would make during peak times if they i) have a surge price mechanism and ii) if they have a fixed price (assume this fixed price to be the equilibrium price during normal hours)? Based on these calculations, would the company see an increase in revenue if they include the surge pricing mechanism? Explain carefully. [ You must show your work. For full points, include a clearly labeled diagram to accompany your explanation. ]Step by Step Solution
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