You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 70 percent of your revenues, which grow about 4 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 $300 million from sales of ebooks and about $700 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 70 percent of your revenues, which grow about 4 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 $300 million from sales of ebooks and about $700 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is −1.5, and the cross-price elasticity of demand between product Y and X is −1.8.How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent?
Every month a certain firm purchases exactly 50 bottles of water to restock its kitchen, regardless of price. Assume that the whole water stock is consumed during the work week and that no extra bottles will be purchased. What is the firm's own price elasticity of demand for this product in absolute value?
Your economist friend told you that because of the change in demand described in part (c), price elasticity of demand changed. Is your friend right? Explain.
Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to: decrease. increase. remain constant. either increase or remain constant, depending upon the size of the price increase. A price elasticity of zero corresponds to a demand curve that is: horizontal. downward sloping with a slope always equal to 1. vertical. either vertical or horizontal. As we move down along a linear demand curve, the price elasticity of demand becomes more: elastic. Inelastic. linear. variable.
Congratulations! You have just landed your first job out of college as an economic analyst at the Bureau of Labor Statistics. Your starting salary is $55,000 per year; an increase of 250% per year over the salary you made at the local coffee shop. The corresponding table gives the percentage change in your purchases of each good after your income increases. Use this information to estimate your income elasticity of demand for each of the items.
Gr8 Ideaz Inc. has determined that the demand function for their heated socks is given by: 5 7P². a. Find E(p), the Elasticity of Demand as a function of price, p. E(p) = b. Find the Elasticity of Demand when heated socks are selling at a price of $10. Give result accurate to at least 3 decimal places. E(10) = c. At this price ($10): We would say the demand for heated socks is: Select an answer Based on this, in order to increase revenue we should: Select an answer d. Use the Elasticity model to determine the price that maximizes revenue. (Round result to 2 decimal places.) D(p) = = 345- p=
You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 80 percent of your revenues, which grow about 2 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 −0.2. In 2019, your company earned about $150 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 1 percent decrease in the price of paper books affect your overall revenues from both paper books and ebooks sales?
Jerome has an initial income of $1020 and a final income of $ 1150. Jerome initially consumed 5 cups of orange soda per week and now consumes 13 cups of orange soda per week. What is Jerome's percentage change in income ? What is Jerome's percentage change in quantity? What is Jerome's Income Elasticity of Demand ?
QUESTION 2 Replicas of popular mid-century furniture and homeware can be highly sought after by interior designers. Suppose a company sold 1000 replica Eames chairs for a price of $600 each. However, when they set the price at $750, they only sold 750. Which of the following statements are true: The point price elasticity of demand for replica Eames chairs at a price of $600 is unit elastic. At a price of $600 per chair, a 1% increase in the price of replica Eames chairs would lead to a 1% decrease in the quantity of chairs sold. The point price elasticity of demand for replica Eames chairs at a price of $600 is 0.0239 (to four decimal places). The point price elasticity of demand for replica Eames chairs at a price of $600 is 0.02 (to two decimal places).
What is the current price of gasoline and how many gallons of gasoline do you currently buy per month? How many gallons would you buy next month and how would your behavior change if the price fell by $1.25 per gallon? Also, based on that information, what is your price elasticity of demand for gasoline? Be sure to show how you calculated your price elasticity of demand. current price of gas = $2.53 gallons of gas per month = 72 gallons no change for next month On the average I fill my tank up 3 times a month each time I go I spend $60-$65
You work in the marketing department of a major telecommunications company. You discover that demand for phone calls during business hours is inelastic, and demand for phone calls during evening hours is elastic. How could your company use this information to increase its total revenue? Fully explain your answer.
*4* When the price of product "X" is (P1=) $42, Shyanne purchases 20 units of product "X" and when the price of product "X" is (P2=) $38, she purchases 30 units of product "X". Shyanne's "arc" price elasticity of demand for product "X" is (Ex,x =): O" -0.25 " and the demand for "X" is relatively elastic. -4.00 " and the demand for "X" is relatively inelastic. O"-0.25 " and the demand for "X" is relatively inelastic. O " -4.00 " and the demand for "X" is relatively elastic. -0.25 " and "X" is a "normal" good. Save & Continue Continue without saving