A company provides meal services to 5000 customers a month, at a cost $17.50 per meal....

A company provides meal services to 5000 customers a month, at a cost $17.50 per meal. The company has a sale for a month reducing the cost per meal by 10% and receives an additional 1000 orders that month. What is the Elasticity Coefficient for the meal service?

Question 5 options:

	2
	.2
	2.1
	1.2

Expert Solution

Ans. 2

Now, Given Data:

Q0 = 5000 customers

P0 = $17.50 per meal

Q1 = 6000 customers (Additional 1000 means 5000 + 1000)

P1 = $15.75 per meal (10% readuction means: (17.50 - (17.50*10%)) = 17.50 - 1.75 = 15.75)

Put above values in equation of Elasticity Coefficient:

The Elasticity Coefficient for the meal service = 2.

Rahul Sunny answered 2 years ago

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A company provides meal services to 5000 customers a month, at a cost $17.50 per meal....

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