Read: Chapters 3 and 5 of the textbook ‘Principles of Economics’ [Attachments ar

Chapters 3 and 5 of the textbook ‘Principles of Economics’ [Attachments are below]
Chapters 2 and 3 of the textbook ‘Introduction to Economic Analysis’ (pp. 13-31) [Attachment is below]
Khan Academy. (2012, January 2). Market equilibrium | Supply, demand, and market equilibrium | Microeconomics | Khan Academy [Video]. YouTube.
Khan Academy. (2018, November 15). Introduction to price elasticity of demand | APⓇ Microeconomics | Khan Academy [Video]. YouTube.
Khan Academy. (2018, November 16). Introduction to price elasticity of supply | APⓇ Microeconomics | Khan Academy [Video]. YouTube.
Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.
1. Compute the price elasticity of demand between these two points.
2. Would you expect total revenues to rise or fall? Explain.
3. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points.
4. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.
5. Compute total revenue at the three meal prices. Do these totals confirm your answers in (b) and (d) above?
Note: Be sure to use in-text citations and provide references for your sources, including textbooks.

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