Answer to Question #115864 in Microeconomics for shamma

Question

3) How has the size of the price rise been affected by the price elasticity of demand for brazil nuts?

4) What determines the price elasticity of demand for brazil nuts? Explain in detail

Answer 1

 How has the size of the price rise been affected by the price elasticity of demand for Brazil nuts?

The price elasticity of demand for the Brazilian nuts can be described as elastic for the changes in demand has a corresponding influence on the price. In most of the markets globally and especially in the United Kingdom, the demand for the nuts rose to hike the price of the Brazilian by about 60 %.

What determines the price elasticity of demand for Brazil nuts? Explain in detail

Necessity and the dietary benefits of the Brazilian nuts as described by the nutritionist led to the increased demand for nuts at any price in the market. Other factors that could have led to increased prices could be derived from the temporarily reduced supply of nuts in the market as a result of ecological factors (reduced precipitation) for agricultural activities. Poor harvest results in a low supply of nuts falling below the demand requirements and the effect are to hike the prices. Environmental factors are either seasonal or can affect the production for longer duration like the cyclical drought effect of El nino that does hit the Amazon.