A local specialty wine store normally sells an average of 95 imported wines from France - per month - over 6 months at $13.97 each. The price elasticity of Demand for these wines is estimated to be -1.40. Recent government regulations, Canadian Dollar value changes and transportation costs have increased costs considerably resulting in higher breakeven prices for all items. In order to capture economic profits the store manager decides to take some action and re-prices the inventory in the store. If the manager increases the price of French Wines by 10% how many bottles of French Wine will they sel? ** HINT - use the basic formula: Elasticity = (Unknown Q / Change in Price) x (Average Price / Average Quantity sold) ** enter your answer for HOW many bottles of French Wine will be sold FOLLOWED by whether the elasticity value is inelastic or elastic.
A local specialty wine store normally sells an average of 95 imported wines from France - per month - over 6 months at $13.97 each. The price elasticity of Demand for these wines is estimated to be -1.40. Recent government regulations, Canadian Dollar value changes and transportation costs have increased costs considerably resulting in higher breakeven prices for all items. In order to capture economic profits the store manager decides to take some action and re-prices the inventory in the store. If the manager increases the price of French Wines by 10% how many bottles of French Wine will they sel? ** HINT - use the basic formula: Elasticity = (Unknown Q / Change in Price) x (Average Price / Average Quantity sold) ** enter your answer for HOW many bottles of French Wine will be sold FOLLOWED by whether the elasticity value is inelastic or elastic.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:A local specialty wine store normally sells an average of 95 imported wines from France - per month - over 6 months at $13.97 each. The price
elasticity of Demand for these wines is estimated to be -1.40.
Recent government regulations, Canadian Dollar value changes and transportation costs have increased costs considerably resulting in higher
breakeven prices for all items. In order to capture economic profits the store manager decides to take some action and re-prices the inventory in the
store.
If the manager increases the price of French Wines by 10% how many bottles of French Wine will they sell
** HINT - use the basic formula: Elasticity = (Unknown Q / Change in Price) x (Average Price / Average Quantity sold)
** enter your answer for HOWW many bottles of French Wine will be sold FOLLOWED by whether the elasticity value is inelastic or elastic.
e.g. 94 elastic
or
e.g. 28 inelastic
Answer:
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