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February 26th, 2012, 03:23 PM   #1
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Revenue and elasticity

The price-demand equation for home delivered large pizza is
p= 38.2-0.002x

where x is the number of pizzas delivered weekly. the current price of one pizza is $21. In order to generate additional revenue from the sale of large pizzas, would you recommend a price increase or a price decrease?

Thanks guys!
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February 26th, 2012, 08:25 PM   #2
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Re: Revenue and elasticity

Start by solving for x with the p = 21. You might try graphing that (x,p) - generally the quantity is the x and money is the y. That'll give you a feel for what it looks like. But plugging in some values higher and lower than 21 and solving for x will tell you if p needs to go higher or lower.

(Unless they are expecting you to do something more fancy with this, that should do it.)
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