Revenues per year from product X $ 15,000 Revenues per year from product Y $ 80,000 Own price elasticity of demand for product X −3 Cross-price elasticity of demand between products X and Y −1.4 Price increase of product X (percent) 3 Instruction: Update the data in your spreadsheet to the values above and enter the recomputed answer for the original question. Required: How much will your firm’s total revenues (revenues from both products) change? Change in revenues: ____________________
Required information
You are the manager of a firm that receives revenues of $20,000 per year from product X and $80,000 per year from product Y. The own
Assume that the information about product X and product Y from the problem changed to the following:
| Revenues per year from product X | $ | 15,000 |
| Revenues per year from product Y | $ | 80,000 |
| Own price elasticity of demand for product X | −3 | |
| Cross-price elasticity of demand between products X and Y | −1.4 | |
| Price increase of product X (percent) | 3 | |
Instruction: Update the data in your spreadsheet to the values above and enter the recomputed answer for the original question.
Required:
How much will your firm’s total revenues (revenues from both products) change?
Change in revenues: ____________________
Price elasticity of demand measures the responsiveness in quantity demanded of a commodity to a change in its price.
Step by step
Solved in 3 steps
