Question: When average household income is $31,000, 380 containers of hazelnut chocolate spread are sold and 220 jars of wild flower honey are sold; when average household income is $34,000, 485 containers of hazelnut chocolate spread are sold and 330 jars of wild flower honey are sold. When wild flower honey costs $4 a jar, 280 jars of wild flower honey are sold and 320 containers of hazelnut chocolate spread are sold; when wild flower honey costs $3 a jar, 360 jars of wild flower honey are sold and 470 containers of hazelnut chocolate spread are sold. For the organic almond milk with calcium (2L), suppose that its quantity demanded (QD) is represented by the equation, QD = 1968 - 34P; and its quantity supplied (QS) is represented by the equation, QS = P, where P is the unit price for 2L organic almond milk with calcium.
a. Briefly explain whether the Price-elasticity of demand can be calculated for wild flower honey, hazelnut chocolate spread, and (2L) organic almond milk with calcium respectively?
b. If so, calculate the price-elasticity of demand using mid-point method.
c. From the result obtained in part (b), describe if this demand for good is elastic or inelastic.
d. From the result obtained in part (b), describe with supporting reason(s) if this good is normal or inferior.
e. Find the equilibrium price and quantity of the organic almond milk with calcium.
f. Determine the values of QD and QS when the new unit price of organic almond milk with calcium is $38.
g. Is there a surplus or a shortage in the market when the unit price of organic almond milk with calcium is fixed at $38?
h. From the result obtained in part (g), determine if the unit price P will rise or fall in order to find the equilibrium point?