1. At a major French food retailer, the own-price elasticities of the demand for various brands of pasta were: -1.36 for national brands, -2.16 for private labels, and -1.85 for low-price brands.At the same retailer, the own-price elasticities of the demand for various brands of biscuits were: -1.00 for national brands, -1.14 for private labels, and -0.50 for low-price brands.(Source: Fabian Berges, Daniel Hassan, and Sylvette Monie Dilhan, "Are consumers more loyal to national brands than to private labels?" Bulletin of Economic Research, Vol. 65, 2013.)

(a)Compare the elasticities of the demand for national brands vis-a-vis private labels of pasta.Does the difference make sense?

(b)Do national brands or private labels or low-price brands command more brandloyalty?(Hint: Interpret brand loyalty by the own-price elasticity.)

(c)Which is more elastic?The demand for pasta or biscuits?

(d)Based on the own-price elasticities, can you make any recommendations on pricing?