a)Explain why a PepsiCo Sales Executive would benefit from understanding cross elasticity of demand and elasticity of demand when evaluating a recommendation to lower the price of Doritos.

i)How does understanding cross elasticity of demand and elasticity of demand support better decision-making?

b)Explain why an Analyst working for the Anti-Trust Division of the Justice Dept. would benefit from understanding cross elasticity of demand when evaluating the proposed merger of Coca Cola Company and Pepsi.

i)How does understanding cross elasticity support better decision-making by the analyst?

a)The increased understanding of the cross elasticity and elasticity factors would be beneficial as these factors will help in increasing the efficiency and quality of the products, the price improved levels of quality will act as an important factor in increasing the expected demand for the same.

i)With the increased and better understanding of the cross elasticity and elasticity of demand, one can understand the results of various actions performed by the firm and hence after keeping these factors in mind and carrying out a discussion on the same there are chances of coming down to better decisions in the course of time and with the agreement of all other members of the team.

b)Understanding the cross elasticity and elasticity of demand in this scenario will put the Analyst in a better position to understand the strategies that can be employed to bring out the best of the proposed merger and generate the most revenue.

i)The analyst can understand the various aspects of the market to understand the various factors affecting the market for the product and what strategies can be implied to increase the sales of the product and maximize the revenue.