Explain why demand for a particular brand is more elastic

Assignment Help Managerial Economics
Reference no: EM13878126

Question :On the basis of historical data, Richard Tennant has concluded, "The consumption of cigarettes is . . . [relatively] insensitive to changes in price. In contrast, the demand for individual brands is highly elastic in its response to price. In 1918, for example, Lucky Strike was sold for a short time at a higher retail price than Camel or Chesterfield and rapidly lost half its business."

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1 percent in 1918, was the price elasticity of demand for its product greater than 2?

b. Do you think that the demand curve for cigarettes is the same now as it was in 1918? If not, describe in detail the factors that have shifted the demand curve and whether each has shifted it to the left or right.

Reference no: EM13878126

Questions Cloud

What effect will this have on the firms sales : During the next decade, per capita disposable income is expected to increase by $5,000. What effect will this have on the firm's sales?
Evaluate the role of international and domestic governmental : Evaluate the role of international and domestic governmental and nongovernmental organizations in the social responsibility of global corporations
Define factors that affect demand : Define Factors that affect demand
Write the household monthly budget constraint : A household allocates its $2,000 monthly income to the purchase of three goods. Prices of these goods are $30, $40, and $20 per unit- Write the household monthly budget constraint.
Explain why demand for a particular brand is more elastic : Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1 percent in 1918, was the price elasticity of demand for its product greater than 2?
How would you summarize apples cash flow position : How would you summarize Apples cash flow position and what does this statement tell you about where the money is coming from and where it's going? What should Apple do to improve its cash position and why?
Classify the gender as quantitative or qualitative variables : Classify the following as quantitative or qualitative variables- Gender, Brand of soft drink
Determine the smallest vertical force : A uniform square table having a weight W and sides a is supported by three vertical legs. Determine the smallest vertical force P that can be applied to its top that will cause it to tipover.
How transfer pricing can be used successfully by multination : how Transfer Pricing can be used successfully by Multinational Corporations

Reviews

Write a Review

Managerial Economics Questions & Answers

  What''s wrong with raising taxes in a recession

Recommend some U.S. fiscal policy change in business taxes or government spending that would reduce the U.S. government's budget deficit and also help improve the U.S. economy?

  Question about piece rate system

The Green Show Corporation is planning going to a piece rate system, where manufacturing workers are paid based on their level of output.

  Evaluating the performance of a mutual fund

Suppose you have just read the yearly report of a mutual fund. It boasted of a 26 percent return and advertised that it had beaten the market return last year by 3% points.

  According to the profit-maximization goal the firm should

According to the profit-maximization goal, the firm should attempt to maximize short-run profitssince there is too much uncertainty associated with long-run profits.

  How do active and passive views of these concepts differ

Explain how the short-run Phillips curve, the long-run Phillips curve, the short-run aggregate supply curve, the long-run aggregate supply curve, and the natural rate hypothesis are all related

  Determining a market structure by concentration ratio

An industry has 20 companies and a concentration ratio of 30 percent. If you were in this industry and there was an increased demand for the product that pushed up price of the goods,

  Labor supply curve for cashiers

In Chicago 120 people are wants to work as cashiers if the wage is $6 a hour. For each $1 that the wage rises above $6 an additional 40 people are wants to work as cashiers.

  Question about resource allocation

Enpar manufactures a one type of engine part for an automotive manufacturer. It operates 2-plants, Plant A and Plant B, which have the following production functions:

  Question about elasticity

Suppose Amanda Herman finds that her total spending on compact dics remaing same after price of compact fall, other things equal.

  The overall balance of payments must always balance

The overall balance of payments must always balance. If this is the case, 1.why might a deficit on one part of the balance of payments is seen as a problem?

  Are economic profits present for this firm in example

Define a normal profit and an economic profit. Are normal profits being earned in this example? Are economic profits present for this firm in this example?

  Neeed to prepare an cgi script that send mass emailsinput

neeed to prepare an cgi script that send mass emails.input fields sender name sender email subject message choose html

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd