1. Bernie sells more hamburgers when they are priced at 1 dollar than five dollars because more people would rather buy a burger for one dollar than 5. The demand goes up higher with the price is lower. As opposed to the demand goes lower when the price is higher. This is the idea of law and demand
2. Bernie sells more hamburgers than salads when they are both priced at 5 dollars is because, the burger is more filling. People want to get full off their moneys worth, where as a salad can be less satisfying and not worth 5 dollars. Peoples tastes and preferences can be inched towards different things. People prefer quantity over quality sometimes when it comes to food.
3. One demand factor that can lead Bernies and Sallys to more entree sales and higher success is lowering the sales of the salads to less than five dollars and keeping the burger at the amount of 5 dollars. This way, people will be more comfortable with their choices and salads will not be overpriced. If people want to eat more and get their moneys worth, they can buy a burger. If people want something light and not too filling a nice, low cost salad can be bought at sallys without wasting money.
4. After a certain price increase, each unit can be sold for a higher price which over course raises revenue. One factor that could affect elasticity is the demand for necessities tends to be relatively less income elastic than items that you only want.
Good understanding of the law of demand. Showed an understanding of the importance of taste and preferences when addressing demand. You did not however, seem to understand how other determinants of demand such as number of consumers or income level can affect demand of all products.
ReplyDeleteAlso, higher prices don't necessarily lead to higher revenues unless the product's demand is inelastic. I wasn't sure about your last comment.
8/10