The owner of a local restaurant comes to you for help. He needs ...

[tichca]

The owner of a local restaurant comes to you for help. He needs to know whether or not he should increase the price of the meals he serves. To answer his question, what information would you like to know?
 
  What will be an ideal response?

Question 2

Rate of return regulation is equivalent to
 
  A) average cost pricing rule.
  B) marginal cost pricing rule.
  C) maximizing consumer surplus.
  D) maximizing producer surplus.

[prumorgan]

Answer to Question 1

Ideally, you would want to be able to calculate the price elasticity of demand for meals at the restaurant. It would also be helpful to determine the cross-price elasticity between meals at this restaurant and other restaurants in the area.

Answer to Question 2

A