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You run a small pizza shop named Pizza Hat. Initially you sold pizzas for $8 and every week you sold around 3000 pizzas. Each pizza costs you $3 to...
You run a small pizza shop named Pizza Hat. Initially you sold pizzas for $8 and every week
you sold around 3000 pizzas. Each pizza costs you $3 to make. One day you decided to o¤er
discounts to customers to see if you can boost sales signicantly. So you slashed the price
to $6, and it turned out that you can sell 3000 more pizzas. Hence you conclude that the
elasticity of demand for your pizzas at $8 is ________. Suppose the elasticity of demand
is constant (does not vary with price). In order to maximize the prots, you should set the
price at $_________.
