You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 60 percent of your revenues, which grow about 3 percent annually. You recently received a preliminary report that suggests the growth rate in ebook reading has leveled off, and that the cross-price elasticity of demand between paper books and ebooks is −0.4. In 2019, your company earned about $400 million from sales of ebooks and about $600 million from sales of paper books. If your data analytics team estimates the own price elasticity of demand for paper books is −2.5, how will a 4 percent decrease in the price of paper books affect your overall revenues from both paper books and ebooks sales? Instructions: Enter your response rounded to one decimal place. Your overall revenues will change by $____million.
You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 60 percent of your revenues, which grow about 3 percent annually. You recently received a preliminary report that suggests the growth rate in ebook reading has leveled off, and that the cross-
If your data analytics team estimates the own price elasticity of demand for paper books is −2.5, how will a 4 percent decrease in the price of paper books affect your overall revenues from both paper books and ebooks sales? Instructions: Enter your response rounded to one decimal place.
Your overall revenues will change by $____million.
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