6. (10 pts.; 2 pts each)You are the manager for Dunkin Donuts and know the follo

    6. (10 pts.; 2 pts each)You
    are the manager for Dunkin Donuts and know the following elasticities:?= 1.5?I = 1.2? xy1 = 0.5? xy2 = -0.5? is the price elasticity of
    demand for Dunkin Donuts (DD) glazed doughnuts ?xy1is the cross elasticity of demand
    between DD glazed doughnuts and Krispy Kreme (KK) glazed doughnuts ?xy2is thecrosselasticity of demand between DD glazed doughnuts
    andDD French
    Vanilla coffee and ?I is the income elasticity of DD glazed doughnuts.a)
    If
    you want to increase your sales of glazed doughnuts by 30% in what direction
    and by how much do you need to change the price?b)
    If
    you make the percentage price change that you calculated in parta) will total revenue increase or
    decrease?How do you know?c)
    Krispy
    Kreme lowers its price of glazed doughnuts by 20%.The demand for Dunkin Donuts glazed doughnuts
    will change by what percentage and in what direction?d)
    Dunkin
    Donuts raises the price of its French Vanilla coffee by 15%. The demand for
    Dunkin Donuts glazed doughnuts will change by what percentage and in what
    direction?e)
    If average
    income increases by 5% by what percentage and in what direction will the demand
    for Dunkin Donuts glazed doughnuts change? Are DD glazed doughnuts a normal
    good or an inferior good and how do you know?

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