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4. (10%) Ji Xiang Ju is the largest producer of pickle in two markets. In market A, the pickles carry Ji Xiang Ju's popu
Posted: Mon Apr 18, 2022 9:11 am
by answerhappygod
- 4 10 Ji Xiang Ju Is The Largest Producer Of Pickle In Two Markets In Market A The Pickles Carry Ji Xiang Ju S Popu 1 (109.71 KiB) Viewed 35 times
4. (10%) 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. a. Are Tai San's current price optimal? b. Management considers the $28 price to be optimal and necessary to meet the competition. What price should the firm set for the Tai San label to achieve an optimal price ratio?