The Manager of the Kendall Square Bertucci's Conducted a Pricing

question 181

Multiple Choice

The manager of the Kendall Square Bertucci's conducted a pricing experiment in August 2016. For the week of August 14-20, 2016, he lowered the price of Bertucci's signature pizza, the small Bertucci, from $13.00 to $11.00. As a result, weekly sales of the small Bertucci rose from 15,000 to 21,000 (see the table below) .

The manager knows his costs did not change from week to week and is confident there were no other external shocks to demand during this time.
-Using the arc or midpoint elasticity formula,the price elasticity of demand for the small Bertucci pizza at the Kendall Square Bertucci's restaurant is ________.

• A) 3
• B) 2.6
• C) 2
• D) 1.57

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Definitions:

Predetermined Overhead Rates

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a chosen activity base.

Machine-Hours

A measure of production time, reflecting the total hours machines are operated in the manufacturing process.

Molding

Molding is a process of forming a material using a rigid frame or model called a mold, commonly used in manufacturing for creating a variety of parts and components.

Customizing

Modifying or tailoring a product or service to meet specific customer needs or requirements.