Congratulations you are the CEO of company FANTASTIC plc. It has been estimated that a 4% increase in your customers’ income will result in an increase in sales of your main product, X by 5.5%. Using this information answer the following questions:”First calculate the income elasticity of your main product?What type of a product is X? Fully explain using an example.What type of income elasticity in associated with product X, why and what does this mean?What will you do IF the income of your customers drops by 2%?

“Hey, since there are multiple subpart questions posted, we will answer first three questions. If…

Answered: Congratulations you are the CEO of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Congratulations you are the CEO of company FANTASTIC plc. It has been estimated that a 4% increase in your customers’ income will result in an increase in sales of your main product, X by 5.5%. Using this information answer the following questions:”

First calculate the income elasticity of your main product?
What type of a product is X? Fully explain using an example.
What type of income elasticity in associated with product X, why and what does this mean?
What will you do IF the income of your customers drops by 2%?

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