Figure 7.4
-Figure 7.4 shows prices, demands, and cost data for the only restaurant in a small town. If the restaurant charges the single price of $8 per meal, what is its profit from non-senior customers?
A) $1,200
B) $1,500
C) $2,280
D) $2,560

Question

Figure 7.4
-Figure 7.4 shows prices, demands, and cost data for the only restaurant in a small town. If the restaurant charges the single price of $8 per meal, what is its profit from non-senior customers?
A) $1,200 
B) $1,500 
C) $2,280 
D) $2,560

Quizplus · Accepted Answer

To find the profit from non-senior customers, we first need to figure out how many non-senior customers there are. Looking at the demand graph, we see that there are 60 non-senior customers when the price is at $8 per meal.

Next, we need to calculate the cost per meal for the restaurant. Looking at the cost graph, we see that the cost per meal is $4.

To calculate the profit per meal, we subtract the cost per meal from the price per meal:

$8 - $4 = $4

Therefore, the profit per non-senior customer is $4. Multiplying this by the number of non-senior customers, we get:

$4 x 60 = $240

However, the question asks for the profit from non-senior customers only, so we need to subtract the cost of providing meals to senior customers. Looking at the demand graph, we see that there are 40 senior customers when the price is at $8 per meal. Since the restaurant charges seniors only $5 per meal, their profit per senior customer is:

$5 - $4 = $1

Multiplying this by the number of senior customers, we get:

$1 x 40 = $40

Subtracting this from the profit from non-senior customers, we get:

$240 - $40 = $200

Therefore, the restaurant's profit from non-senior customers is $200.

Figure 7.4 -Figure 7.4 Shows Prices, Demands, and Cost Data for the for the Only