BUSINESS M 23 – A firm finds the following elasticities for two of its products

Subject: General Questions    / General General Questions

QUESTION 3 (25)

3.1 A firm operating in the FMCG sector finds the following elasticities for two of its products:

Product A:

Price elasticity of demand = 2.3

Income elasticity of demand = 1.8

Product B:

Price elasticity of demand = 0.7

Cross elasticity of demand = 4.1

3.1.1 Discuss in detail with reference to the given elasticities, the pricing strategies you would recommend for each of these products if the goal is to increase sales revenue. Justify your suggestions. (10) (700 words)

3.1.2 Given the current economic climate in South Africa, explain two non-price strategies you would recommend to increase sales of product A. (5) (400 words)

3.3 Using an industry/sector of your choice, explain the concepts of economies of scale and scope. What is the role played by technology/innovation in maximising such economies and how would this impact on production decisions? (10) (700 words)

There are 3 questions – please stick to the word count and Havard referencing