The data below give estimates of elasticity of demand for selected foods in a country.

INCOME ELASTICITY OF DEMAND(YED)

all foods 0.10

Beef. 0.26

Margarine. -0.22

Fresh potatoes -0.43

Fruit juice. 0.95

Bread. -0.18

PRICE ELASTICITY OF DEMAND (PED)

Beef. -1.24

Bread. -0.25

Fresh potatoes -0.14

Fruit juice. -0.65

Margarine. -0.3

Cross elasticity of demand for beef and pork

Beef with respect to the price of pork : 0.10

Pork with respect to the price of beef: 0.25

A) with reference to the data, explain why

i: all the price elasticities of demand are negative

ii) some income elasticities of demand are positive and some are negative

iii) beef has a high PED but a relatively low YED

B) i) explain what is meant by the term cross elasticity of demand

ii) comment on the values shown in the table for the cross elasticity of Demand for beef and pork.

C) it is expected that levels of income in the country will rise. It is likely that large food retailers will wish to take account of the data on elasticities in their marketing decisions.

i) explain with examples, what uses might be made of the data by large food retailers.

ii) comment on the likely limitations of the data for their purposes.