Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

A) 0.1%
B) 0.5%
C) 0.7%
D) 1%

Question

​Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?A) ​0.1%B) 0.5%C) 0.7%D) ​1%

Jossy ndubuisi · Accepted Answer

Final Answer : B, Explanation :  The aggregate own price elasticity of the market can be estimated using the formula for the elasticity of a firm with respect to the market elasticity, which is: E_market = E_firm * S, where E_firm is the firm's own price elasticity and S is the firm's market share. Here, E_firm = 5 and S = 10% or 0.1. Therefore, E_market = 5 * 0.1 = 0.5.

Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

A) 0.1%
B) 0.5%
C) 0.7%
D) 1%

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​Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?A) ​0.1%B) 0.5%C) 0.7%D) ​1%

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Related questions

Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

A) 0.1%
B) 0.5%
C) 0.7%
D) 1%