The owner of Bob's Breakfast just bought Nancy's Famous Breakfast across the street.They offer the same breakfast items on the menu.The demand for Bob's Breakfast is more elastic than Nancy's Famous Breakfast.What should the owner do?

Question

Quizplus · Accepted Answer

The demand for Bob's Breakfast is more elastic than Nancy's Famous Breakfast, meaning that a change in price will have a greater impact on the quantity demanded at Bob's Breakfast. Therefore, the owner should raise the prices at both restaurants, but raise the price of Bob's Breakfast more. This will allow the owner to increase profits at both restaurants while still maintaining a competitive advantage at Bob's Breakfast.

The Owner of Bob's Breakfast Just Bought Nancy's Famous Breakfast