4. DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes, Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000 kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to improve revenue, the managers of the firm have decided to increase all prices by 10%. Market research has suggested that the price elasticity of demand for each product is: Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the planned price increases. a. Comment on the planned price changes. b. Would a 10% price reduction have been better for some or all of the products?
4. DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes, Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000 kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to improve revenue, the managers of the firm have decided to increase all prices by 10%. Market research has suggested that the price elasticity of demand for each product is: Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the planned price increases. a. Comment on the planned price changes. b. Would a 10% price reduction have been better for some or all of the products?
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter4: The Market Forces Of Supply And Demand
Section: Chapter Questions
Problem 5PA
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![4. DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes,
Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the
Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000
kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to
improve revenue, the managers of the firm have decided to increase all prices by 10%.
Market research has suggested that the price elasticity of demand for each product is:
Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the
planned price increases.
a. Comment on the planned price changes.
b. Would a 10% price reduction have been better for some or all of the products?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9b7da844-7175-4c38-9ae5-502c082dd374%2F05b7fd9b-a0e6-4afc-bb13-e6723d8cfa0d%2Fvxhnoth_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes,
Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the
Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000
kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to
improve revenue, the managers of the firm have decided to increase all prices by 10%.
Market research has suggested that the price elasticity of demand for each product is:
Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the
planned price increases.
a. Comment on the planned price changes.
b. Would a 10% price reduction have been better for some or all of the products?
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