Teena's Business Venture Teena is an art teacher but a year ago, she decided to take a year's leave without pay to start a new business. She became the owner of a coffee shop in AlBarsha. She is selling coffee and sandwiches. She has leased two coffee machines at a cost of AED 1600 per month. The monthly rent for the caf is AED 5000. Her salary as a teacher was AED 8000 per month. Teena hired two university students to help her, paying each student a monthly salary of AED 3000. Her monthly expenditure on coffee beans and other ingredients is AED 4000 and AED1000 on other expenditures (electricity, cleaning, etc.). Teena faces the following demand curves for coffee and sandwiches. Demand curve for coffee per week Qd = 200 - 2 x P Demand curve for sandwiches per week Qd = 400 - 12 x P Teena has no knowledge of elementary microeconomics. She does not know how to calculate the elasticity of demand. She is currently charging a price of AED 20.00 per unit for both coffee and sandwiches and is thinking about increasing the price of both to AED 25.00 per unit.

Task 1 :

Explain to Teena the meaning of "normal profit". Does she need to exit the market if she is earning a normal profit.

Task 2:

Explain the concept of price elasticity of demand to Teena and advise her about her pricing strategy for both coffee and sandwiches. Do you think it is a good idea for her to increase the price of both items from AED 20 to AED 25? Justify your answer.

Task 3 :

Given the information provided describe the type of market Teena's coffee shop is operating in. Make sure you explain the features and the behaviour of firms in this type of market.

Please explain in this in business report format