4. (10 marks) Ji Xiang Ju is the largest producer of pickle in two markets. In market A, the pickles carry Ji Xiang Ju’s

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4. (10 marks) Ji Xiang Ju is the largest producer of pickle in
two markets. In market A, the pickles carry Ji Xiang Ju’s popular
label, Tai San, and receive a substantial price premium. In market
B, Ji Xiang Ju sells pickles without any logo, uses the simplest
package and labels with the name Ji Xiang Ju. The retail price of
the pickles carrying the Tai San label is $37 while the Ji Xiang Ju
pickles sell for $28. The price elasticity of demand for Tai San
pickles is -1.5, and the elasticity of demand for Ji Xiang Ju
pickles is -5. Moreover, the research suggests that both
elasticities are constant over broad ranges of output.