A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?

A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 17CQ

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