G.R. Dry Foods Distributors specializes in the wholesale distribution of dry goods, such as rice and dry beans. The firm’s manager is concerned about an article he read in this morning’s newspaper indicating that the incomes of individuals in the lowest income bracket are expected to increase by 10 percent over the next year. While the manager is pleased to see this group of individuals doing well, he is concerned about the impact this will have on G.R. Dry Foods. Why would the manager be concerned about the rise in income? What do you think is likely to happen to the price of the products G.R. Dry Foods sells? Why? Explain to the manager the relationship between elasticity and total and marginal revenue.  

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The manager may be concerned that the rise in income will lead to an increase in the demand for the ... View the full answer