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1. Price elasticity of demand

The price elasticity of demand measures how much the quantity demanded of a good or service changes in response to a change in price. If the quantity demanded of a good or service increases when the price decreases (and vice versa), then the good or service is said to be price elastic(REVENUE, 2016). If the quantity demanded of a good or service does not change (or changes only slightly) in response to a change in price, then the good or service is said to be price inelastic

. Brand-namedrugs are typically priced inelastic because people who need them will continue to purchase them even if the price goes up. Fast food is typically price elastic because people can choose to purchase other types of food if the price of fast food goes up.

The price elasticity of demand for fast food is elastic because people can choose to purchase other types of food if the price of fast food goes up(REVENUE, 2016).

2. Income Elasticity of demand

The income elasticity of demand for brand-name drugs is relatively high, while the income elasticity of demand for fast food is relatively low. The higher income elasticity for brand-name drugs is since these products are generally seen as necessities, while fast food is seen as a discretionary purchase.

The income elasticity of demand for brand-name drugs is higher than the income elasticity of demand for fast food. This is because brand-name drugs are generally seen as necessary items, while fast food is seen as a discretionary purchase. Income elasticity is a measure of how responsive demand is to changes in income.

A higher income elasticity means that demand is more responsive to changes in income. In this case, the income elasticity of demand for brand-name drugs is higher than the income elasticity of demand for fast food, indicating that brand-name drugs are more of a necessity than fast food.

3. Cross-price elasticity of demand

There is likely to be a negative cross-price elasticity of demand between the main products of the two companies(products). This is because brand-name drugs and fast food are generally seen as complementary products. A negative cross-price elasticity of demand indicates that an increase in the price of one good will lead to a decrease in the demand for the other good.

The income elasticity of demand for brand-name drugs is high because these products are generally seen as necessities. People will continue to purchase brand-name drugs even when their incomes are tight, because they view these products as essential.

The income elasticity of demand for fast food is low because these products are generally seen as discretionary purchases. People are less likely to purchase fast food when their incomes are tight because they view these products as non-essential.

4- Pfizer's main products are brand-name drugs, while McDonald's'main products are fast food items. There is likely to be a negative cross-price elasticity of demand between these two types of products because they are generally seen as complementary products. A negative cross-price elasticity of demand indicates that an increase in the price of one good will lead to a decrease in the demand for the other good.

Pfizer and McDonald's are both large, multinational companies with a wide variety of products. As such, they are likely to achieve economies of scale and scope. Economies of scale refer to the cost advantages that a company achieves by increasing its production. Economies of scope refer to the cost advantages that a company achieves by expanding its product line.

Pfizer's products are brand-name drugs, while McDonald's products are fast food items. Brand-name drugs are generally seen as necessities, while fast food is seen as a discretionary purchase. The income elasticity of demand for brand-name drugs is relatively high, while the income elasticity of demand for fast food is relatively low.

References:

Mcka,S. (2016).Price elasticity of demand and its effect on revenue. GRIN Verlag.

Ghoddusi,H. (2018).Income elasticity of demand versus income elasticity of consumption.

Pattern,G. (2015).Estimating cross-price elasticity of demand and cross-income elasticity of demand for Atlantic salmon (Salmo Salar) cultured in British Columbia.

Regmi,A., & Seale,J.L. (2010).Cross-price elasticities of demand across 114 countries.

Owen,M. (2014).Price elasticity of demand 67 success secrets - 67 most asked questions on price elasticity of demand - What you need to know. Emereo Publishing