Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Good Price elasticity of demand Google Play App -3.7 Apple Store App -2.0 Lindt Chocolate -0.7 Ghirardelli Chocolate -1.3 Reese's Peanut Butter Easter Eggs -0.7

Good Price elasticity of demand

Google Play App -3.7

Apple Store App -2.0

Lindt Chocolate -0.7

Ghirardelli Chocolate -1.3

Reese's Peanut Butter Easter Eggs -0.7

Reese's Peanut Butter Cups -3.9

Organic milk -1.78

Non-organic milk -1.02

Organic Eggs -0.99

Non-organic eggs -0.99

Expensive Spirits* -4.74

Cheap Spirits* -2.81

*Spirits are alcoholic beverages including brandy, vodka, rum, gin, and whiskey. Other alcoholic beverages like wine and beer are not considered spirits.

a. Google and Apple sell many of the same apps. Why do you think the price elasticity of demand for google play store and apple store is different?

b. Consider the expensive spirits and the cheap spirits. Are the price elasticities of demand what you would expect? Explain. Also, explain why the price elasticities of demand are so different from each other.

c. Suppose you work for a candy company. How can you use the information about the price elasticities of chocolate strategically to increase revenues? (I am not asking about using the price elasticities of chocolates to set prices, I am asking about using the price elasticities of chocolates to develop other strategies for your company.)

d. Why is organic milk more elastic than non-organic milk? Why are organic eggs not more elastic than non-organic eggs?

e. What would you expect the cross-price elasticity between organic and non-organic milk to show? Be specific and consider the cross price if we change the price of organic and also if we change the price of non-organic milk

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction to Management Science

Authors: Bernard W. Taylor

11th Edition

978-0132751919

Students also viewed these Economics questions