From the table below, which gives the price elasticity of demand for Florida Ind
ID: 1103177 • Letter: F
Question
From the table below, which gives the price elasticity of demand for Florida Indian River oranges, Florida interior oranges, and California oranges, as well as the cross-price elasticities among them.
Type of Orange
Florida Indian River
Florida Interior
California
Florida Indian River
-3.07
1.56
0.01
Florida Interior
1.16
-3.01
0.14
California
10.18
0.09
-2.76
In BOLD - Price Elasticity; In NOT BOLD- Cross-Price Elasticity
Explain the competitiveness (quantity demanded and revenue) of the above oranges when there is a 10% decreases in price. ( Vertical is Y axes, Horizontal is X axes)
Type of Orange
Florida Indian River
Florida Interior
California
Florida Indian River
-3.07
1.56
0.01
Florida Interior
1.16
-3.01
0.14
California
10.18
0.09
-2.76
In BOLD - Price Elasticity; In NOT BOLD- Cross-Price Elasticity
Explanation / Answer
Price elasticity of demand articulates us the percentage change in quantity demanded for each 1 percent change in its own price. Cross price elasticity of demand suggests us the percentage change in quantity demanded for each 1 percent change in price of other related goods.
Florida Indian River
A a 10% decreases in price of Florida Indian River will increase its quantity demanded by 3.07*10 = 30.7%. Since the demand is elastic, this step will increase revenue
A a 10% decreases in price of Florida Interior will decrease its quantity demanded by 1.56*10 = 15.6%. Since the demand is elastic, this step will increase revenue
A a 10% decreases in price of California will decrease its quantity demanded by 0.01*10 = 0.1%. Since the demand is inelastic, this step will decrease revenue
Florida Interior
A a 10% decreases in price of Florida Indian River will decrease its quantity demanded by 1.16*10 = 11.6%. Since the demand is elastic, this step will increase revenue
A a 10% decreases in price of Florida Interior will increase its quantity demanded by 3.01*10 = 30.1%. Since the demand is elastic, this step will increase revenue
A a 10% decreases in price of California will decrease its quantity demanded by 0.14*10 = 1.4%. Since the demand is elastic, this step will decrease revenue
California
A a 10% decreases in price of Florida Indian River will decrease its quantity demanded by 10.18*10 = 101.10%. Since the demand is elastic, this step will increase revenue
A a 10% decreases in price of Florida Interior will decrease its quantity demanded by 0.09*10 = 0.9%. Since the demand is inelastic, this step will decrease revenue
A a 10% decreases in price of California will increase its quantity demanded by 2.76*10 = 27.6%. Since the demand is elastic, this step will increase revenue .
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