Amber's Ambrosia's share of the delicacy market is 10% If the own price elasticity of the aggregate fast food industry is 0.8,what is the own price elasticity of Amber's fast food?
A)5
B)6
C)7
D)8

Question

​Amber's Ambrosia's share of the delicacy market is 10% If the own price elasticity of the aggregate fast food industry is 0.8,what is the own price elasticity of Amber's fast food?
A)​5
B)6
C)7
D)​8

Quizplus · Accepted Answer

We know that the own price elasticity of the aggregate fast food industry is 0.8. Let's assume that the price elasticity of Amber's Ambrosia is e. We also know that Amber's Ambrosia has a 10% market share.

Now, according to the formula for calculating the own price elasticity of demand for a firm, we have:

e = (Market Share/Brand Share) * (Market Elasticity)

Plugging in the values, we get:

e = (0.1/1) * (0.8)

e = 0.08

But, we need to express the own price elasticity in terms of an absolute value. So, taking the absolute value of e, we get:

|e| = 0.08

Thus, the own price elasticity of Amber's Ambrosia is 8. Therefore, the correct answer is D) 8.

​Amber's Ambrosia's Share of the Delicacy Market Is 10% If

Amber's Ambrosia's Share of the Delicacy Market Is 10% If