Relationship between cola magic and lemon heaven soda
Think about the next info, produced by a market analysis company, about quite a lot of gentle drink your agency produces (Cola Magic) and a aggressive mannequin, Lemon Heaven Soda.
All the data pertains to long run market changes.
Personal value elasticity of demand for the Cola Magic is (-) 2.7
Cross value elasticity of demand with respect to Lemon Heaven Soda is + three.2
Earnings elasticity of demand for Cola Magic goal market is + 1.5
(a) Utilizing the idea of cross value elasticity of demand, does your agency have market energy in respect to Lemon Heaven Soda? Why or why not?
(b) Clarify the connection between Cola Magic and Lemon Heaven Soda.
(c) Clarify what have an effect on a 10% improve within the revenue of the targetmarket can be on the demand for the Cola Magic?
(d) Your agency’s accountant argues that as a result of the demand for the Cola Magic is value elastic, the agency ought to drop its value. Briefly focus on this suggestion indicating if you happen to would help this suggestion or not. What different issue(s) must be taken into consideration when giving your suggestion to administration.
