Order ID:89JHGSJE83839 | Style:APA/MLA/Harvard/Chicago | Pages:5-10 |
Instructions:
Analyzing Elasticity Course Project
Background Information
Antonio’s Mexican Restaurant operates a regional chain of 55 Mexican-American fast-food shops in the Midwestern United States. Their business model centers on prepared food that is sold ala-carte to customers. The shops have a small dining area, enough to accommodate 12 customers.
However, the success of the shops has always been in their ability to quickly fulfill prepaid online and app-driven orders at a separate “drive-up/grab and go” location at the shops. The process results in orders consistently fulfilled in less than 30 seconds, with no onsite payments to slow down the line.
The COVID-19 pandemic of 2020 forced the closure of all 55 of the shops’ indoor dining areas. Such an event would have shaken the very foundation of most restaurants of this type, but Antonio’s experience with “grab and go” gave the company a competitive edge as the pandemic unfolded.
During the second quarter of 2020, sales were 30% higher than the same quarter of 2019. In response to the increased demand, Antonio’s added a second drive-up window to all of its shops with a very aggressive third-quarter construction program. Sales continued to climb through the remainder of 2020 and through the first quarter of 2021.
Antonio’s Mexican Restaurant operates a regional chain of 55 Mexican-American fast-food shops in the Midwestern United States. Their business model centers on prepared food that is sold ala-carte to customers. The shops have a small dining area, enough to accommodate 12 customers.
However, the success of the shops has always been in their ability to quickly fulfill prepaid online and app-driven orders at a separate “drive-up/grab and go” location at the shops. The process results in orders consistently fulfilled in less than 30 seconds, with no onsite payments to slow down the line.
The COVID-19 pandemic of 2020 forced the closure of all 55 of the shops’ indoor dining areas. Such an event would have shaken the very foundation of most restaurants of this type, but Antonio’s experience with “grab and go” gave the company a competitive edge as the pandemic unfolded.
During the second quarter of 2020, sales were 30% higher than the same quarter of 2019. In response to the increased demand, Antonio’s added a second drive-up window to all of its shops with a very aggressive third-quarter construction program. Sales continued to climb through the remainder of 2020 and through the first quarter of 2021.
Instructions
In your textbook, Economics for Managers, review:
Chapter 2, “Demand, Supply and Equilibrium Prices”
Chapter 3, “Demand Elasticities”
Review the media: Changes in Supply and Demand
Antonio’s is struggling to try to keep up with demand for its regionally popular tacos, burritos, and Southwestern salads. They have hired you as an economic consultant to assist them with some important pricing issues facing the firm’s 55 restaurants. Their questions are the following:
We are perplexed with the outcome of certain price changes at our restaurants. Prior to the pandemic, we sold our Mexican combo, consisting of one beef or chicken taco, one beef or chicken burrito, and one small cup of refried beans for $5.95. At that time, our average shop was selling 600 Mexican combos each week.
Once the pandemic hit, our commodity inputs rose in price as did the cost of our labor. We hesitantly raised the price to $6.95, anticipating a major reduction in the weekly quantity of demand. To our amazement, average sales per store only declined by 15 combos per week. Please calculate the coefficient of price elasticity of the combo meal using the Midpoints Formula.
As a budding economist, what can you conclude about the price elasticity of our combo meals? Did our combo meals prove to be elastic or inelastic in nature? Explain.
Senior management has directed shop managers to listen very closely to customers as it relates to this and other price changes at the shop. Without exception, our customers enjoy our products so much, they often state that even after the increase, “they would purchase the combo meals at one dollar more, without hesitation.”
What does this information infer to you relative to the “pricing power” we have with our combo meals? What does this infer in terms of the combo’s “consumer surplus?”
management is stunned by their consumers’ lack of price responsiveness to the combo meals. Understanding that our reduction in sales has been minimal, and the fact that consumers continue to speak so highly of the combo meals, does this suggest that Antonio’s might consider another price increase to the $7.25 to $7.75 range? Explain your rationale for your conclusion on future pricing.
Complete the case study by addressing each of the four questions and posting your analysis with a Word or similar file. Show all work on the calculations.
Change in Supply and Demand –
https://media.pearsoncmg.com/pls/products/coco/intro_economics_ap/1256910732/presentations/bu_ie_03_splash.html?fromLms
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Analyzing Elasticity Course Project |
Analyzing Elasticity Course Project