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(a) If the price of a slice of pizza at a local pizzeria is $5.00 and the quantity demanded at this price is 50 slices, what is the price elasticity of demand for pizza if, when the price is increased to $5.50, the quantity demanded for pizza slices falls to 30 slices?

(b) An analyst working in this area reveals that generally pizza has a price elasticity of demand equal to 0.8. If this was true, what should have happened to the quantity demanded for pizza slices at this local pizzeria? (Compute this).

(c) Finally, provide an explanation for why the results from the analyst might be plausible even though not compatible with the actual outcome for the pizzeria.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

Please show the work:

1- Suppose price elasticity of demand of a pizza at the local pizza restaurant is setimated to be 4. by how much does the quantity of pizza sold change if the shop raises the price of pizza by 5%?

2- Suppose a local clothing estimates that the income of its customers has increased by 16%. This clothing store calculated income elasticity of demand to be 1.2. how much should the quantity demanded of clothes change based on this infomation? what does the income elasticity tell you about the goods this clothing store is selling?

When the price of the pizza was $10.00 for a medium pizza, students at a college consumed 400 pizzas per week. When the price of pizza increased to $30.00 for a medium pizza, students at a college consumed 100 pizzas per week. Calculate the price elasticity of demand for medium pizzas for the students. You must show your work to receive credit for your calculation. If the price of pizza increases by 1%, by what will the percentage change in quantity demanded of pizzas for the students?

There are four buyers (Debu, Sumon, Aslam & Rakib) in the market. All of them want to buy a pizza. Debu is willing to pay 800/- taka for one pizza, Sumon is willing to pay 600/- taka for one pizza, Aslam is willing to pay 400/- taka for one pizza, and Rakib is willing to pay 200/- taka for one pizza. On the other hand, there are four pizza sellers in the market (Anup, Roni, Himel & Badal). Anup’s cost of producing one pizza is 200/- taka, Roni’s cost of producing one pizza is 400/- taka, Himel’s cost of producing one pizza is 600/- taka, and Badal’s cost of producing one pizza is 800/- taka. Based on all of this information, answer the following questions

Q1 Derive the demand schedule for pizza.

Q2 If the market price of one pizza is 450/- taka, what will be the market quantity demanded pizzas, and what will be the total consumer surplus?

Q3 If the market price of one pizza is 350/- taka, what will be the market quantity demanded pizzas, and what will be the total consumer surplus?

Q4 Derive the supply schedule for pizza.

Q5 If the market price of one pizza is 500/- taka, what will be the market quantity supplied for pizzas, and what will be the total producer surplus?

Q6 If the market price of one pizza is 900/- taka, what will be the market quantity supplied for pizzas, and what will be the total producer surplus?

Q7 Now, considering the demand and supply side of this pizza market, calculate the market quantity demanded and quantity supplied at 100/-, 300/- and 500/- taka. Which of these prices brings supply and demand into equilibrium?

Q8 What are the entire consumer surplus & producer surplus, and total surplus in this equilibrium?

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