2. Elasticity question 2 a. Explain why a PepsiCo Sales Executive would benefit

Question

2. Elasticity question 2

a. Explain why a PepsiCo Sales Executive would benefit from understanding cross elasticity of demand and elasticity of demand when evaluating a recommendation to lower the price of Doritos.

       i. How does understanding cross elasticity of demand and elasticity of demand support better decision-making?

b. Explain why an Analyst working for the Anti-Trust Division of the Justice Dept. would benefit from understanding cross elasticity of demand when evaluating the proposed merger of Coca Cola Company and Pepsi.

     i. How does understanding cross elasticity support better decision-making by the analyst?

Explanation / Answer

2(a) The PepsiCo Sales Executive would benefit from understanding cross elasticity of demand and also for evaluating a recommnedation to lower the price of Doritos because the good quality of product increases it demand in the market. It shows monopoly after a long time due to quality standards and price.

(i) The understanding of cross elasticity of demand and elasticity of demand support better decision-making by a mutual decision making by the team mates and upper management of the company. It is a joint decision after a fair discussion over the topic.

(b) An Analyst working for the Anti-Trust Division of the Justice Dept. would benefit from understanding cross elasticity of demand when evaluating the proposed merger of Coca Cola Company and Pepsi. The reason is research done on the market strategy to bring the brand to the top of the market. It would give rise to increased market conduct to bring maximum revenues.

(i) The understanding of cross elasticity would support better decision making by the analyst. It would create enough opporturnities to raise the supply of the product. It is going to be liked by consumer due to good quality.

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