What is the price elasticity of demand for dunkin donuts dd

Question

Answer all of the questions:

You are the manager for Dunkin Donuts and know the following elasticities:

?= 1.5 ? _I = 1.2 ? _xy1 = 0.5 ? _xy2 = -0.5

What is the price elasticity of demand for Dunkin Donuts (DD) glazed doughnuts, What _xy1is the cross elasticity of demand between DD glazed doughnuts and Krispy Kreme (KK) glazed doughnuts, What _xy2is thecrosselasticity of demand between DD glazed doughnuts andDD French Vanilla coffee, and What _I is the income elasticity of DD glazed doughnuts.

1. If you want to increase your sales of glazed doughnuts by 30%, in what direction and by how much do you need to change the price?
2. If you make the percentage price change that you calculated in parta) will total revenue increase or decrease? How do you know?
3. Krispy Kreme lowers its price of glazed doughnuts by 20%. The demand for Dunkin Donuts glazed doughnuts will change by what percentage and in what direction?
5. Dunkin Donuts raises the price of its French Vanilla coffee by 15%. The demand for Dunkin Donuts glazed doughnuts will change by what percentage and in what direction?
6. If average income increases by 5% by what percentage and in what direction will the demand for Dunkin Donuts glazed doughnuts change? Are DD glazed doughnuts a normal good or an inferior good and how do you know?