Wilson \& Taylor Plc is a multinational conglomerate. The company has a business division, Wilson 8Taylor Tyres, that manufactures fyres for motorcycles and cars. There is an automobile division of the company, Witson \& Taylor Automobile, that manufactures cars Wilson \& Taylor Automobile purchase tyres for its automobiles from an outside vendor, However, at the ond of the current month, the contract with the vendor for the tyres of vans will expire. The senior management of Wison \& Taylor Ple feels that the automobile division of the company should purchase tyres for vans from its own tyre division rather than renewing the contract with the outside vendor. The managers of both the divisions are also interested 2 having intra-company transactions as it will bo in the best interests of both the divisions as well as the company as a whole The tyres for vans manufactured by Wison 8 Taylor Aufomobile are of standard size. The tyres are radial tyres (ie. 185/70R14 ) and have a width of 185 milimetres, wieight of 70 inches and a diameter of 14 inches. Wilson 8 Taylor Automobile needs 15,000 tyres in in month to manufacture vans The quality of the fyres supplied by the outside vendor and the ones manulactured by Wilson 8 Taylor Tyres are similar Wison 2. Taylor Automobile currently pays RT3 to the outside vendor for a tyre of van But, the tyres division of Wison \& Taylor Ple charges R74 for a tyre of van. The production capacity of the division is 50.000 van tyres per month. The variable cost to produce one van fyre is R35. The fixed cost incurred in the manufacture of van tyras is R100,000 per month Maria Lorenzi owns an ice cream stand that she operates during the summer months in West Yellowstone, Montana. Her store caters primarily to tourists passing through town on their way to Yellowstone National Park. Maria is unsure of how she should price her ice cream cones and has experimented with two prices in successive weeks during the busy August season. The number of people who entered the store was roughly the same in the two weeks. During the first week, she priced the cones at R1.89 and 1,500 cones were sold. During the second week, she priced the cones at R1,49 and 2,340 cones were sold. The variable cost of a cone is R0.43 and consists solely of the costs of the ice cream and of the cone itself. The fixed expenses of the ice cream stand are R675 per week. Estimate the price elasticity of demand for the ice cream cones. (Do not round intermediate calculations. Negative value should be indicated with a minus sign.)
