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Why the price elasticities of demand are so different

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Price elasticity of demand

Google Play App 3.7
Apple Store App 2.0
Lindt Chocolate 0.7
Ghirardelli Chocolate 1.3
Reese's Peanut Butter Easter Eggs 0.7
Reese's Peanut Butter Cups 3.9
Organic milk 1.78
Non-organic milk 1.02
Organic Eggs 0.99
Non-organic eggs 0.99
Expensive Spirits* 4.74
Cheap Spirits* 2.81

*Spirits are alcoholic beverages including brandy, vodka, rum, gin, and whiskey. Other alcoholic beverages like wine and beer are not considered spirits.

a. Google and Apple sell many of the same apps. Why do you think the price elasticity of demand for google play store and apple store is different?

b. Consider the expensive spirits and the cheap spirits. Are the price elasticities of demand what you would expect? Explain. Also, explain why the price elasticities of demand are so different from each other.

c. Suppose you work for a candy company. How can you use the information about the price elasticities of chocolate strategically to increase revenues? (I am not asking about using the price elasticities of chocolates to set prices, I am asking about using the price elasticities of chocolates to develop other strategies for your company.)

d. Why is organic milk more elastic than non-organic milk? Why are organic eggs not more elastic than non-organic eggs?

e. What would you expect the cross-price elasticity between organic and non-organic milk to show? Be specific and consider the cross price if we change the price of organic and also if we change the price of non-organic milk

Reference no: EM133084064

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