2Consumer Demand Analysis and Estimation Applied ProblemsProblem 1Patricia is researching venues for a restaurant business. She is evaluating three major attributes that she considers important in her choice: taste, location, and price. The value she places on each attribute, however, differs according to what type of restaurant she is going to start. If she opens a restaurant in a suburban area of Los Angeles, then taste is the most importantattribute, three times as important as location, and two times as important as price. If she opens a restaurant in the Los Angeles metropolitan area, then location becomes three times as important as taste and two times as important as price. She is considering two venues, respectively, a steak restaurant and a pizza restaurant, both of which are priced the same. She has rated each attribute on a scale of 1 to 100 for each of the two different types of restaurants.a)Which of the two options should Patricia pursue if she wants to open a restaurant in a suburban area of Los Angeles? Calculate the total expected utility from each restaurant option and compare. Graph is not required. Describe your answer, and show your calculations.If in fact Patricia was aspiring to open a steak restaurant or a pizza restaurant in the suburban Los Angeles, she has all of the tools that are needed to calculate the expected utility from each of her possible ventures. The expected utility of the two the restaurants that would be the highest would be the restaurant venture that Patricia would want to open in hopes that it
MANAGERIAL ECONOMICS DECISIONS WITH ATTRIBUTE ASSIGNMENT AND ELASTICITY OF DEMAND FOR NEWTON’S DONUTS 3 Abstract. This paper describes two problems. Problem one consists of use of an attribute-assigning and decision making model quantifying two alternatives in food service and restaurant location. It calculates and recommends type of food served and restaurant location based on taste, location, and price attributes and importance of them in each of two locations. Problem 2 calculates elasticity of demand for Newton’s donuts using a demand curve supplied in the problem. It answers questions of price elasticity of demand, inverse demand curve, and profitability of increasing advertising spending. Problem One A suburban restaurant location’s taste attribute is three times as important as location and two times as important as price. So, for the taste, location, and price attributes of suburban steak restaurant business, the following assigned attributes must be weighted in terms of importance. Taste is assigned a value of importance in attribute of 1. Since taste is three times as important as location, then location importance = 1/3. And taste is two times the importance of price, then price importance = ½.