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Topic: Price Elasticity of Demand
Explain in paragraphs each what would happen to the price elasticity of demand for Selecta ice cream when each of the following events occur. Indicate if it will increase, decrease, or remain the same, and why?
1. Other dairy-based manufacturers, such as Alaska and Anchor, decided to make and sell ice creams.
2. Ice creams from foreign countries has been banned in the Philippine market.
3. Due to advertising, people now believe that only Selecta ice creams help the local farmers.
During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not have enough time to expand its kitchen or add an additional seating area.
Draw diagrams to explain how shifts in aggregate supply and demand are likely to lead to changes in output and inflation when:
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It costs M&M $52 to purchase each unit, the fixed cost of ordering is $260, and the carrying costs equal 15 pecent of the units purchase price.
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