At a major French food retailer, the own-price elasticities of the demand for various brands of pasta were: −1.36 for national brands, −2.16 for private labels, and −1.85 for lowprice brands. At the same retailer, the own-price elasticities of the demand for various brands of biscuits were: −1.00 for national brands, −1.14 for private labels, and −0.50 for low-price brands. (Source: Fabian Berges, Daniel Hassan, and Sylvette Monier-Dilhan, “Are consumers more loyal to national brands than to private labels?,” Working Paper, Toulouse School of Economics, 2013.)

(a) Compare the elasticities of the demand for national brands and private labels of pasta. Does the difference make sense?

(b) Do national brands or private labels or low-price brands command more brand loyalty? (Hint: Interpret brand loyalty by the own-price elasticity.)

(c) Which is more elastic? The demand for pasta or biscuits?

(d) Based on the own-price elasticities, can you make any recommendations on pricing?

Answer rating: 100% (QA)

Answer a 2008 Information P 1 125 P 2 150 change in price 150 ... View the full answer