You manage MBA Deli which sells meals at a price of $6 each

1. Analysis of Pricing: You manage MBA Deli which sells meals at a price of $6 each. The average number of meals sold per month is 7,000. MBA Deli would like to increase its sales and profits. The MBAs running the Deli, know that if price is lowered, theywill sell more meals. So they run an experiment. Price is lowered to $5 per meal in October and the number of meals sold increases to 8,000.Â a. What is the Price Elasticity of Demand?Â b. Is elasticity elastic, inelastic or neither?Â c. What does this mean andÂ why does it matter?Â d. Will Revenues increase or decrease as a result of the price cut? By How much? e. Beatrice has calculated the fixed costs for the Deli are $14,000 per month and each meal costs $2.50. Will profits go up or down as a result of the pricecut? By How much?Â 2. Warren suggests that there wasnÃ¢Â€Â™t enough time in the experiment. He estimates that in the second month, MBA Deli will sell 9,000 meals. Please answer the following assuming that Warren is correct.Â a. What is the Price Elasticity of Demand?b. Is elasticity elastic, inelastic or neither?Â c. What does this mean and why does it matter?Â d. Will Revenues increase or decrease as a result of the price cut? By How much?Â e. Beatrice has calculated the fixed costs for the Deli are $14,000 per month andeach meal costs $2.50. Will profits go up or down as a result of the price cut? By How much?Â 4. Why is management willing toÂ supply more at higher prices?Â 5. Why are the customers willing to buy more at lower prices and why do they buy less at higher prices?

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