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Economics

Suppose that the market for frozen grape juice is in equilibrium at a price of $1.10 per can and a quantity of 4,100 cans per month. Now suppose that a price of $1.65 per can, quantity demanded falls to 2,930 bagels per month and quantity supplied increases to 4,400 cans per month.

a. Draw the appropriate diagram for this market.

b. Calculate the price elasticity of demand for frozen grape juice between the prices of $1.10 and $1.65. Is the demand elastic or inelastic?

c. Calculate the price elasticity of supply for frozen grape juice between the prices of $1.10 and $1.65. Is the supply elastic or inelastic?

d. Elucidate in general what factors would affect the elasticity of demand for frozen grape juice.

e. Explain in general what factors would affect the elasticity of supply of frozen grape juice.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9221610

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