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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 5 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 -0.5. 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 -3, how will a 1 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 5 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 -0.5. 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 -3, how will a 1 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.

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter6: Demand And Elasticity
Section: Chapter Questions
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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 5 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 -0.5. 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 -3, how will a 1 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.
Transcribed Image Text: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 5 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 -0.5. 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 -3, how will a 1 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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