the question is based off this article from NY Times: \"Valetine\'s Day Chocolat
ID: 1130329 • Letter: T
Question
the question is based off this article from NY Times: "Valetine's Day Chocolate Will Cost More This Year, as Cocoa Price Rise" by Stephanie Strom
1. The article never uses the word “elasticity,” however, the concept is central to the analysis.
a) Identify one sentence that talks about the price elasticity of demand (without using that exact terminology). Based on this, is the demand for chocolate price elastic or price inelastic?
b) There are a number of price and quantity estimates referenced in the article. Use the ones in this sentence to calculate the price elasticity of demand: “On a call with investment analysts, Bert Alfonso, chief financial officer at Hershey, said the company was increasing prices 5 to 6 percent. He predicted that would reduce sales volumes 2 percent.” (Hint: use 5.5 percent as your estimate for the change in price.) Based on this, is the demand for chocolate price elastic or price inelastic?
Explanation / Answer
The one sentence is........ he predicted that this will reduce sales volume by 2%.The demand is inelastic because price rise is more than quantity demanded
B 2/5.5=0.36
Please like answer if you want me to help you in future
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.