A farmer group produces and packages quails, and supplies them to a market segment using a single product focus strategy. The important features of this market segment are summarized in the demand function which is estimated as Qd=1085P0+74PS43PT+38I+316G where Qd is the quantity of quail packs bought by consumers in the market segment per month, P0 is the own price of quails in the market segment, PS is the monthly price of meat spice supplied by other firms in the market segment, PT is the monthly price of turkey meat packs supplied by other firms in the same market segment, I is the average monthly income of individual consumers in the market segment, and G is the monthly growth of the market segment. In the next month, Qd is projected to be 64,P0 to be 40,PS to be 196,PT to be 32,I to be 120 , and G to be 6 . You are required to estimate the: (a) own price elasticity of demand and explain whether the quails are ordinary or giffen products in the market segment [4 marks] (b) cross price elasticity of demand and explain whether the meat spice is complementary or competing with quails in the market segment [4 marks] (c) cross price elasticity of demand and explain whether the turkey meat is complementary or competing with quails in the market segment [4 marks] (d) income elasticity of demand and explain whether the quails are necessary or luxurious products in the market segment [4 marks] (e) elasticity of demand with respect to segment growth, and explain the sensitivity of the quail business to market segment growth [4 marks] A farmer group produces and packages quails, and supplies them to a market segment using a single product focus strategy. The important features of this market segment are summarized in the demand function which is estimated as Qd=1085P0+74PS43PT+38I+316G where Qd is the quantity of quail packs bought by consumers in the market segment per month, P0 is the own price of quails in the market segment, PS is the monthly price of meat spice supplied by other firms in the market segment, PT is the monthly price of turkey meat packs supplied by other firms in the same market segment, I is the average monthly income of individual consumers in the market segment, and G is the monthly growth of the market segment. In the next month, Qd is projected to be 64,P0 to be 40,PS to be 196,PT to be 32,I to be 120 , and G to be 6 . You are required to estimate the: (a) own price elasticity of demand and explain whether the quails are ordinary or giffen products in the market segment [4 marks] (b) cross price elasticity of demand and explain whether the meat spice is complementary or competing with quails in the market segment [4 marks] (c) cross price elasticity of demand and explain whether the turkey meat is complementary or competing with quails in the market segment [4 marks] (d) income elasticity of demand and explain whether the quails are necessary or luxurious products in the market segment [4 marks] (e) elasticity of demand with respect to segment growth, and explain the sensitivity of the quail business to market segment growth [4 marks]
