Question

en carefully, which elastic the significance of you problem Read the question carefully, and after analyzing the situation, answer it completely in the space below it. Be sure to identity which elasticity or elasticities is/are involved, & apply the "ppropriate formulae). Show all work and explain the significance of your results April has just learned that her 100 shares of Apricot common stock, which her aunt gave ner graduation present in May of the previous year, have risen from $50 a share to sughty over 130 each. Reacting to this windfall. Aprilgoes shopping for a few things she has wanted for a while, including an iFone VI., and a new convertible to replace her hand-me-down minivan Interestingly, April notes that her taste for wine coolers seems to have waned, and rather than buying her usual five 4-packs a month, she is now picking up a bottle of French champagne each Friday on her way home. Analyze April's situation, applying the relevant elasticity/les. Problem. Read the question carefully and answer each part of it directly be completely. Be sure to identify and explain what is taking place. Show all work. As a result of a mysterious disease that has wiped out more than half of the bee population on the Eastem seaboard, honey is now in short supply. Consequently, the price of a 12-oz. jar has risen an average of 53.00 to $4.50. As might be expected sales have taken a dive. One local food market has reported that its weekly sales have dropped from 25 jars to 12. At the same time, the sales of two other items have also experienced changes, although their prices have stayed the same. According to the manager of the same store, sales of com syrup have taken off, from an average of ten 16 oz. bottles a week to 15, while sales of most varieties of tea have decreased, from 30 boxes per week to 20. Please explain to the befuddled food retailers of the area what is going on. rienced charped from 25 jars Caken a dive. 6.12.02. ja

Answer 1

Noting important bulletins from the question first; the supply of honey in the market has decreased. A 12oz. bottle earlier used to cost $3, and because of the shortage of supply in the market, the price increased to $4.50. The weekly sale of an average seller dropped by 50% almost (25 to 12). A substitute in the market, corn syrup, from 10 bottles to 15 bottles a week. On the other side, honey related product, varieties of tea have faced a little shortage in demand, that is from 30 to 20.

Applying the basic concept of demand and supply, the supply of honey has decreased because of the shortage in the raw materials (bees, obviously!). The demand is constant, the fewer bottles in the market are sold at a higher price, to intentionally decrease the demand. Because of the increased price of one bottle of honey (which is almost double the price), the demand decreased (as intended). An increase in the sales of corn syrup indicates that corn syrup is a close substitute for honey, due to which the sales of corn syrup increased from 5 bottles a week. Since. the corn syrup is not a perfect substitute for honey, it cannot be used for tea which usually uses honey. Therefore, the price of the related product (which is honey) brought down the demand for tea varieties, consumed together.

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