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Write it in a different words: Your analysis seems to be based on the concept of price elasticity of demand, which measures how much the
Write it in a different words: Your analysis seems to be based on the concept of price elasticity of demand, which measures how much the quantity demanded of a good responds to a change in the price of that good. In this case, you're assuming that the demand for buns is inelastic, meaning that a 10% increase in price would lead to less than a 10% decrease in quantity demanded (in this case, a 5% decrease). This analysis is correct if your assumptions hold true. However, it's important to note that these assumptions may not always hold. For example, if the demand for buns is more elastic than you assumed, a 10% price increase could lead to a larger than 5% decrease in quantity demanded, which could decrease total revenue. Similarly, if costs do not remain constant, this could also impact your profit calculations. In conclusion, while your analysis suggests that increasing the price of buns could increase profits, this conclusion is dependent on the accuracy of your assumptions. It would be prudent to test these assumptions in a controlled environment or use market research to validate them before implementing such a strategy
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