Zahra’s Pizza Company provides delivery and carry out services all around Kampala
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Zahra’s Pizza Company provides delivery and carry out services all around Kampala

Question 2

Zahra’s Pizza Company provides delivery and carry out services all around Kampala city. Analysis of the daily demand for Pizzas has revealed the following demand relation: 

Q=1,400−100PS+0.01CSP+750S

Where, Q is the quantity measured by the number of Pizzas per day, P is the price ($), PS is a price index for soda (2005 = 100), CSP is the college student population and S is a binary or dummy variable, equal to 1 on Friday, Saturday and Sunday and Zero otherwise.

a. Determine the demand curve facing Zahra on Tuesdays if P = $10, PS = 125, and CSP = 35,000.

b. Calculate the quantity demanded and total revenues on Fridays if all price related variables are as specified above.

Hint
EconomicsBinary variables are variables which only take two values. For example, Male or Female, True or False and Yes or No. While many variables and questions are naturally binary, it is often useful to construct binary variables from other types of data. For example, turning age into two groups: less than 35 and 35 or more....
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