The elasticity coefficient calculation for papaya to be optimally priced at $2.35 per pound cannot be determined accurately due to an apparent typo in the variable cost provided ($51.10/pound). In a market economy, prices are determined by the balance of supply and demand, where equilibrium is reached at a price that clears the market.
To calculate the elasticity coefficient that would make $2.35 per pound the optimal price for papaya, given that this is the price Super Global International Food Market believes to be optimal and their variable cost is $51.10 per pound. There appears to be a typo in the question as having a variable cost of $51.10 per pound is unrealistic when the selling price is $2.35. Usually, the selling price must be higher than the variable cost to make a profit. Assuming this is a typo and the variable cost was intended to be something lower, like $1.10 per pound, we would proceed by applying the formula for optimal price based on elasticity:
Optimal Price = Variable Cost / (1 - 1/Elasticity).
However, without the correct variable cost, we cannot calculate the elasticity coefficient accurately.
In a market economy, prices are determined by the supply and demand forces, which means that both consumers and producers collectively work to determine the price. The equilibrium price and quantity of goods like bananas, grapes, fish, and sugar are set when the amount supplied equals the amount demanded at a certain price level, as illustrated in typical demand and supply models.
Complete Question
The Super Global International Food Market sells papaya for $2.35 per pound. the company believes that $2.35 is its optimal price. The company's variable cost is $51.10/pound. Calculate the elasticity coefficient that would make $2.35 per pound the optimal price. Round your answer to 1 decimal place.