Please is Due Tomorrow. Elasticity and its Application (Pay attention to the own
ID: 1135407 • Letter: P
Question
Please is Due Tomorrow.
Elasticity and its Application (Pay attention to the own price elasticity of demand).
Try to evaluate the own price elasticity of demand for the following items:
Determinants of the own price elasticity of demand, your discussion (How does the price elasticity of demand affect total revenues of food producers? How does it affect their pricing decision and their marketing strategies? What policies can you recommend?)
Locally grown food
Fast food, processed food
My Summary
List the sources used: ...
You do not need to find the exact number, for example,
elasticity = 0.8.
Determinants of the own price elasticity of demand, your discussion (How does the price elasticity of demand affect total revenues of food producers? How does it affect their pricing decision and their marketing strategies? What policies can you recommend?)
Locally grown food
Fast food, processed food
Explanation / Answer
Locally grown Food:
Locally growth food is supplied at local demand. Further, people might have become habitual to it. Hence, demand for locally grown food is inelastic. Or change in price does not affect its demand substantially. Further it is considered hygienic ones. Hence, firm can increase price, increase in price would invariably lead to rise in total revenue. If elasticity of demand happens to be less the unit, it is always beneficial to enhance price.
Fast Food, Processed food:
There is competition in fast food industry, hence price plays critical role in determining elasticity of demand. Apart from this, fast food is not good for health. Thus, elasticity of demand tends to be larger or elastic. Thus, rise in price would not produce positive impact on total revenue of firm. Firm should not increase price, else it will decrease revenue of firm.
Note: Increase in price is not profitable when elasticity of demand tends to be less than unit.