Author Question: During a recession when people's incomes drop, grocery chains experience much smaller declines in ... (Read 46 times)

stevenposner · **on:** Jun 29, 2018

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

What will be an ideal response?

Question 2

In the personal computer (PC) market in the first half of 2008, Hewlett-Packard maintained its worldwide No. 1 ranking at a market share of 19.1 percent.

Dell's market share was 16 percent and Acer held onto third place with a 9.5 percent share, and Lenovo maintained fourth place, with a 7.9 percent share. What is the four-firm concentration ratio in the PC market?
A) 60.3
B) 52.5
C) 45
D) 36.5

jliusyl · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

During a recession, people's income decreases leading to a decrease in the quantity of normal goods they buy. The demand for necessities, however, is less income elastic, that is, less responsive to a change in income, than the demand for luxuries. So grocery stores, which sell mainly necessities, lose fewer sales than do upscale department stores, which sell luxury items.

Answer to Question 2

B