Until recently, hamburgers at the city sports arena cost $5.50 each. The food concessionaries sold an average of 6,250 hamburgers on game night. When the price was raised to $6.50, hamburger sales dropped off to an average of 4,500 per night

Question

Until recently, hamburgers at the city sports arena cost $5.50 each. The food concessionaries sold an average of 6,250 hamburgers on game night. When the price was raised to $6.50, hamburger sales dropped off to an average of 4,500 per night.

(a) Assuming a linear demand curve, find the price of a hamburger that will maximize the nightly hamburger revenue.

(b) If the concessionaire had fixed costs of $2,500 per night and the variable cost is $0.70 per hamburger, find the price of a hamburger that will maximize the nightly hamburger profit.

Anonymous · Answer

To maximize nightly hamburger revenue, the price of a hamburger should be calculated using the linear demand curve. Additionally, considering fixed costs of $2,500 per night and a variable cost of $0.70 per hamburger, the price that maximizes nightly hamburger profit can also be determined.

To provide specific prices, the necessary calculations involving demand elasticity and cost analysis must be performed.

Until recently, hamburgers at the city sports arena cost $5.50 each. The food concessionaries sold an average of 6,250 hamburgers on game night. When the price was raised to $6.50, hamburger sales dropped off to an average of 4,500 per night

1 Answer