There are two countries, assume them to be 'A' and 'B'. In country 'A' pomegranates are a critical part of the diet and are central to the preparation of many popular food recipes. For most of these dishes, there is no feasible substitute for pomegranates. In the second country (B) , households will purchase pomegranates if the price is right, but consumers do not consider them to be particularly special or unique, and few popular dishes rely on pomegranates in their recipes.

Following are some other facts given to you:

Pomegranates are native to both countries

Due to inherent limitations of shipping options, there is no intercountry trade in pomegranates; Each country's market for pomegranates is independent of that of the other countries.

In both countries, droughts and other weather-related shocks periodically cause unexpected changes in supply conditions.

Answer the following questions from the case:

1. In which one of these two countries, you think, demand for pomegranate has more elasticity? Why?

2. Illustrate the effect of price changes on demand quantity through a graphical representation for both the countries.

3. Considering the given information, draw a table showing the market demand at 4 different prices in both the countries; then calculate the price elasticity of demand for country 'A' using the 'Ratio or Percentage' method; and for country 'B' using the 'Total Outlay Method'.

Note: for calculating elasticity, use the values of lowest and highest price only.

4. In which country suppliers have strong bargaining power? Why?

5. Go through the following graph, which shows the time paths of pomegranate prices over a 10-year period in each country (the solid line is the time path in one country; the dashed line is the time path in the other country).

6. Based on the information provided, which is the time path for each country? Why?