Frito-lay's overall research objective
is to understand
why Lays potato chip sales are flat or stagnant.
The company observed the fact and conducted some research which
showed that people like low fat snacks which include more popcorn, pretzels,
and other healthy snack options. Because of this, the company focused on
development of new potato chips which are low in fat.
Frito-Lay is a US based company which operates in many kinds of potato
chips and their employees are more than 48000 in US and Canada.
Answer:
(A) 10%
Explanation:
The price elasticity of demand measures the sensitivity of demand in the face of price change. The calculation of the price elasticity of demand consists in dividing the change in quantity by the change in price. If the result is greater than | 1 | We say that demand is elastic, that is, sensitive to changes in price. If the result is between 0 and 1 we say that demand is inelastic, not sensitive to changes in price.
Thus we already know that the demand for beer is elastic, price sensitive. By applying the formula, we get the following result:
E = ΔQ/ΔP
At where
E = elasticity
ΔQ = Change in Quantity
ΔP = Price change
Exercise gives us the data of E = 1.5% and ΔQ = 15%
So using the formula:
1,5 = 15%/ΔP
ΔP = 1,5/15 = 0,1 = 10%
Therefore, to reduce the number of student deaths in car accidents, a tax needs to raise the price of alcohol by 10%.
Note: It is given that the variation in the number of deaths is proportional to the variation in the quantity demanded for beer.
The answer is B
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