- 10 Marks
BMIS – Mar 2023 – L1 – Q2a – Competitive forces and markets
Calculates the price elasticity of demand for a product and explains factors that determine it.
Question
You are the Account Officer of Dinke Café, a company that sells cocoa drink to a wide range of consumers. The company sells a cup of cocoa drink for GH¢2, which yielded a sales output of 10 million cups for the year ending 2021. As part of a promotional package to celebrate its silver jubilee, the company reduced its price to GH¢1.50, which increased its total sales output to 15 million cups for the year ending 2022.
Required:
i) Calculate the price elasticity of demand of Dinke Café.
(4 marks)
ii) Explain THREE (3) factors that might have determined the company’s price elasticity of demand.
(6 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Demand Determinants, Market Analysis, Price Elasticity, Pricing Strategy
- Level: Level 1
- Topic: Competitive forces and markets
- Series: MAR 2023
Report an error