A 1986 study of demand for orange juice in the U.S. estimated the following price elasticities...

 

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A 1986 study of demand for orange juice in the U.S. estimated the following price elasticities with respect to orange juice, given the prevailing prices of various juices in that year, reported in Table 1. with respect to price of Orange Juice Grape Juice Apple Juice -1.39 -0.19 0.91 Table 1: Elasticities of demand for orange juice (a) An orange juice producer wants to increase its yearly revenues. Should it increase, decrease, or not change its price from the current level? Explain. (b) Suppose that Americans currently buy 35 million gallons of orange juice per month. As a result of an unusually strong apple growing season, an increased supply of apple juice leads to a 1.5% decrease in the price of apple juice. How many gallons of orange juice per month do you expect Americans to buy as a result of this price decrease in apple juice? A 1986 study of demand for orange juice in the U.S. estimated the following price elasticities with respect to orange juice, given the prevailing prices of various juices in that year, reported in Table 1. with respect to price of Orange Juice Grape Juice Apple Juice -1.39 -0.19 0.91 Table 1: Elasticities of demand for orange juice (a) An orange juice producer wants to increase its yearly revenues. Should it increase, decrease, or not change its price from the current level? Explain. (b) Suppose that Americans currently buy 35 million gallons of orange juice per month. As a result of an unusually strong apple growing season, an increased supply of apple juice leads to a 1.5% decrease in the price of apple juice. How many gallons of orange juice per month do you expect Americans to buy as a result of this price decrease in apple juice?

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