1. The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently…

1. The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently…

1. The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently sells for the price of $5.00. Giuseppe, the proprietor of Burrito Barn, knows the price elasticity for the Firegut is roughly equal to -2.3 over the range being considered for the price change. The Firegut has been selling at the brisk pace of 500 burritos per week. To increase market share, Giuseppe would like to increase sales to 750 per week. What price should Giuseppe set?

2. Utility companies can use a mix of plants different energy sources to produce electricity, mainly these are coal fired plants but increasingly they relying on gas turbines. Technological improvements in hydraulic fracturing, or “fracking,” have decreased the cost of extracting smaller pockets of natural gas. What affect does fracking have on supply and demand for coal?

3. You are considering launching a strategic alliance with a competitor to join your separate skills to develop a new jointly owned technology. Both you and your partner have the option of fully or partially supporting the alliance. Complete the payoff diagram to make this a Prisoner’s Dilemma.

You fully support alliance

You partially support alliance

Partner fully supports alliance

You: 100

Partner: 100

You: 150

Partner: 50

Partner partially supports alliance

You: 50

Partner: 150

You:

Partner:

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1. The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently…

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