Question

Question 1 McDonald's, a big burger joint, is charging $6 for its very famous Big Mac hamburger and selling around 20 million Big Mac in a year in Australia. Suppose Mcdonals's Big Mac and movie tickets have negative cross price elasticity of -0.8. What does this number tell us on the relationship between the Big Mac and movie tickets? Suppose, The Village Cinemas, Australia's leading cinema exhibitor, decides to increase the price of its movie tickets by 10%. How will this development affect McDonald's pricing decisions as indicated in part (a)? Discuss both the scenarios (as presented in part (a)) in 200 or less words. (4 marks)

          Question 1
McDonald's, a big burger joint, is charging $6 for its very famous Big Mac hamburger and
selling around 20 million Big Mac in a year in Australia.
Suppose Mcdonals's Big Mac and movie tickets have negative cross price elasticity of -0.8.
What does this number tell us on the relationship between the Big Mac and movie tickets?
Suppose, The Village Cinemas, Australia's leading cinema exhibitor, decides to increase the
price of its movie tickets by 10%. How will this development affect McDonald's pricing
decisions as indicated in part (a)? Discuss both the scenarios (as presented in part (a)) in
200 or less words. (4 marks)

Question 1
McDonald's, a big burger joint, is charging 6 for its very famous Big Mac hamburger and
selling around 20 million Big Mac in a year in Australia.
Suppose Mcdonals's Big Mac and movie tickets have negative cross price elasticity of -0.8.
What does this number tell us on the relationship between the Big Mac and movie tickets?
Suppose, The Village Cinemas, Australia's leading cinema exhibitor, decides to increase the
price of its movie tickets by 10%. How will this development affect McDonald's pricing
decisions as indicated in part (a)? Discuss both the scenarios (as presented in part (a)) in
200 or less words. (4 marks)

Added by Gregory C.

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