Question
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
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 monier-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 brand loyalty? (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?
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