A local pizzeria charges $10 for a pizza. The owner of the pizzeria wants to increase the company's total revenue. A recent market research shows that the price elasticity of demand for his pizza is about 1.5
Should the pizzeria lower or raise the price? Explain your answer.
The pizzeria should lower the price. Since the demand is price elastic, the percentage decrease in price will be smaller than the percentage increase in the quantity of pizza demanded caused by this price decrease. Therefore, the total revenue will increase.
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In general, as the amount of labor input decreases, the amount of output
A. increases. B. decreases. C. remains constant. D. decreases only if the capital stock also decreases.
Which of the following is NOT an example of raising rivals' fixed costs?
A. Federal Express lobbying the U.S. Department of Transportation to increase annual terminal fees. B. Existing doctors in a particular medical field lobby to require new doctors to acquire new licenses. C. Yellow Cab Company lobbying New York City government officials for an ordinance that would require all taxi cab drivers to pay for a medallion, giving them the right to drive a cab in New York City. D. The New York Port Authority lobbying to increase the tolls on New York City's George Washington Bridge.