Table: Value Meals $$\begin{array} { l c c }
\hline & \text { James } & \text { Chris } \
\hline \text { Cheeseburger } & \$ 1.50 & \$ 1.00 \
\text { French Fries } & \$ 0.50 & \$ 1.25 \
\text { Soft Drink } & \$ 1.20 & \$ 0.50 \
\hline
\end{array}$$
The table shows James and Chris' willingness to pay at a local fast-food restaurant. Use this information to answer the following questions.
a.
If the fast-food restaurant is trying to maximize profits by pricing separately, what price will they charge for a cheeseburger? French fries? Soft drink?
b.
Assuming that it costs the restaurant only $0.10 to produce a cheeseburger, $0.15 to produce one order of French fries, and $0.05 to produce a soft drink, what will be their total profits if they price separately using the prices determined above?
c.
Suppose the restaurant is trying to decide whether or not to offer a value meal, which would include a cheeseburger, French fries, and a soft drink. What price should they charge for this value meal? Would profits be higher or lower than if the restaurant sets prices individually? Explain.

Question

Table: Value Meals $$\begin{array} { l c c } 
\hline & \text { James } & \text { Chris } \
\hline \text { Cheeseburger } & \$ 1.50 & \$ 1.00 \
\text { French Fries } & \$ 0.50 & \$ 1.25 \
\text { Soft Drink } & \$ 1.20 & \$ 0.50 \
\hline
\end{array}$$ 
The table shows James and Chris' willingness to pay at a local fast-food restaurant. Use this information to answer the following questions.
a.
If the fast-food restaurant is trying to maximize profits by pricing separately, what price will they charge for a cheeseburger? French fries? Soft drink?
b.
Assuming that it costs the restaurant only $0.10 to produce a cheeseburger, $0.15 to produce one order of French fries, and $0.05 to produce a soft drink, what will be their total profits if they price separately using the prices determined above?
c.
Suppose the restaurant is trying to decide whether or not to offer a value meal, which would include a cheeseburger, French fries, and a soft drink. What price should they charge for this value meal? Would profits be higher or lower than if the restaurant sets prices individually? Explain.

Quizplus · Accepted Answer

The Answer of Table: Value Meals $$\begin{array} { l c c } 
\hline & \text { James } & \text { Chris } \
\hline \text { Cheeseburger } & \$ 1.50 & \$ 1.00 \
\text { French Fries } & \$ 0.50 & \$ 1.25 \
\text { Soft Drink } & \$ 1.20 & \$ 0.50 \
\hline
\end{array}$$ 
The table shows James and Chris' willingness to pay at a local fast-food restaurant. Use this information to answer the following questions.
a.
If the fast-food restaurant is trying to maximize profits by pricing separately, what price will they charge for a cheeseburger? French fries? Soft drink?
b.
Assuming that it costs the restaurant only $0.10 to produce a cheeseburger, $0.15 to produce one order of French fries, and $0.05 to produce a soft drink, what will be their total profits if they price separately using the prices determined above?
c.
Suppose the restaurant is trying to decide whether or not to offer a value meal, which would include a cheeseburger, French fries, and a soft drink. What price should they charge for this value meal? Would profits be higher or lower than if the restaurant sets prices individually? Explain.

Table: Value Meals The Table Shows James and Chris' Willingness to Pay at