Assume this is January 2019. You’re running a Wine company that has 80% domestic sales and 20% export sales as measured by shipped bottles. Of the domestic sales, 50% is sold via the restaurant channel, 30% is sold to supermarket chains. You production capacity for this year 2019 is for 100,000(Q) bottles (from grapes processed in 2018) if you bottle this already this year. This wine is currently kept in wine casks (տակառ)․ If aged the wine will be more valuable. Land, cellar and casket capacity has been fixed since the establishment of your château (գինետուն). These are prices received (P) and costs per bottle (AC) per sales channel: Domestic Restaurant channel: Price – 3300AMD, Total Cost (AC) – 1900AMD Domestic Retail/supermarket channel: Price – 3600AMD, Total Cost – 1900AMD Export channel: Price – 13USD, Total Cost (incl. shipment) – 4100AMD Current exchange rate is 485AMD per 1 USD Is your product likely categorized by high or low price elasticity of demand? Following from above elasticity characterization, if the price rises 5% by how will the quantity of demand change? (Don’t forget to put the correct sign in front of the stated number)
Assume this is January 2019.
You’re running a Wine company that has 80% domestic sales and 20% export sales as measured by shipped bottles.
Of the domestic sales, 50% is sold via the restaurant channel, 30% is sold to supermarket chains.
You production capacity for this year 2019 is for 100,000(Q) bottles (from grapes processed in 2018) if you bottle this already this year. This wine is currently kept in wine casks (տակառ)․ If aged the wine will be more valuable. Land, cellar and casket capacity has been fixed since the establishment of your château (գինետուն).
These are prices received (P) and costs per bottle (AC) per sales channel:
Domestic Restaurant channel:
Domestic Retail/supermarket channel: Price – 3600AMD, Total Cost – 1900AMD
Export channel: Price – 13USD, Total Cost (incl. shipment) – 4100AMD
Current exchange rate is 485AMD per 1 USD
Is your product likely categorized by high or low
Following from above elasticity characterization, if the price rises 5% by how will the quantity of demand change? (Don’t forget to put the correct sign in front of the stated number)
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