The sandwich shop is a restaurant that serves only one item, the ham sandwich. The restaurant...

The sandwich shop is a restaurant that serves only one item, the ham sandwich. The restaurant serves two groups of customers, younger adults and senior citizens. The two segments have the following demand functions: younger adults, Q_y = 5,000 – 10P_y and senior citizens, Q_s = 10,000 – 100P_s. The restaurant has constant marginal cost of $10 and no fixed costs.

(4)a. Write the inverse demand and marginal revenue functions for each segment of the ham sandwich market.

(4)b. What are the profit maximizing price and quantity for each segment and how much profit will he earn?

(4)c. What are the price elasticities of demand for each segment at the prices and quantities you determined in part “b”

Expert Solution

Rahul Sunny answered 7 months ago

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