Question 2(Marks: 20)

You are told that the price elasticity of demand for biltong is estimated to be1.89.

Use this information to answer the questions that follow.

Marks will be awarded for your ability to integrate theory with the scenario provided.

Q.2.1

• Identify any six factors that can impact the price elasticity of demand for biltong; and
• Explain how each one can be applied to achieve this elasticity coefficient.

(12)

Q.2.2

Based on an elasticity coefficient of1,89, explain how biltong producers can increase total revenue from the sale of biltong.

(4)

Q.2.3

Fitness enthusiasts consider biltong to be an excellent source of protein and a good alternative to drinking a protein shake.

Based on this information, would you expect the cross elasticity of demand for biltong to be positive or negative if the price of protein shakes increases? Explain your answer.

(4)