(a) Briefly explain why an individual's demand curve for Truffles is different from the market demand curve for Truffles. Which curve is likely to be more price elastic? (b) Why is the responsiveness in the quantity demanded for Truffles to a change in its price important to the firm? 

(b) Following difficult trading conditions in the Eurozone, Unique has seen an increase in demand for its range of Truffles. It has determined that at current prices, the demand for its ginger, cranberry, and blueberry-infused truffles has a price elasticity of -2 in the short run, while the price elasticity of its orange and lemon twist Truffle is -1. 

(i) If Unique decides to raise the price of both products by 10 percent, explain what will happen to its sales and its sales revenue.

(ii) Can you discern which product will generate the most revenue for Unique from the available information? If not, what additional information would you need? 

(c) Diagram and explain the results of a successful advertising and marketing campaign begun by Unique for its brand of Wild Cherry Truffles on the equilibrium price and quantity of Wild Cherry Truffles (Hint commence from the market situation)

Answer rating: 100% (QA)

solution a An individuals demand curve for Truffles is different from the market demand curve for Truffles because they have different preferences income levels and availability of substitutes The ind... View the full answer