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Question: gemmas kitchen is a small caf based in sydney that...

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Gemma’s Kitchen is a small café based in Sydney that earns the majority of its income from the burgers it produces and sells.

(a) Assume that when the price of burgers increases by 15%, the quantity of burgers demanded declines by 20%. Using this information explain how the price elasticity of demand for burgers can be calculated and interpret the result.

(c) Would a strategy of maximising the revenue, that the business earns, maximise Gemma’s Kitchen’s profits? Justify your answer and include an appropriate diagram as part of your response.

 

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