You are the manager of a firm that receives revenues of $50,000 per year from product Xand $80,000 per year from product Y. The own price elasticity of demand for product X is -3, and the cross-price elasticity of demand between product Y and X is 1.8.

You are the manager of a firm that receives revenues of $50,000 per year from product Xand $80,000 per year from product Y. The own price elasticity of demand for product X is -3, and the cross-price elasticity of demand between product Y and X is 1.8.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

You are the manager of a firm that receives
revenues of $50,000 per year from product X and
$80,000 per year from product Y. The own price
elasticity of demand for product X is -3, 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 2 percent?

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